Under what conditions does Crave have the right to purchase a franchised business from a franchisee?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
14.8.1 At any time during the term of this Agreement, we shall have the right to purchase the Franchised Business from you by giving you written notice that we are exercising our option to purchase the Franchised Business pursuant to this Section 14.8. The purchase of the Franchised Business shall include, without limitation, leasehold improvements, equipment, furniture, fixtures, signs, inventory and the lease or sublease for the Accepted Location. We shall have the unrestricted right to assign this option to purchase. We or our assignee shall be entitled to all customary warranties and representations given by the seller of a business including, without limitation, representations and warranties as to (a) ownership, condition and title to assets; (b) liens and encumbrances relating to the assets; (c) validity of contracts inuring to us or affecting the assets; and (d) contingent or other liabilities.
14.8.2 The purchase price for the assets of the Franchised Businessshall be the fair market value determined as of the date of our written notice to you in a manner consistent with reasonable depreciation of leasehold improvements owned by you and the equipment, furniture, fixtures, signs and inventory of the Franchised Business. The purchase price shall not contain any factor or increment for any trademark, service mark or other commercial symbol used in connection with the operation of the Franchised Business, or goodwill or "going concern" value for the Franchised Business. We may exclude from the assets purchased hereunder any equipment, furniture, fixtures, signs and inventory that are not approved as meeting quality standards for Crave businesses. The length of the remaining term of the lease or sublease for the Accepted Location shall also be considered in determining the fair market value hereunder. If we and you are unable to agree on the fair market value of the assets, the fair market value shall be determined by an independent appraiser selected by us and you. If we and you are unable to agree on an appraiser, we shall each select one (1) appraiser who shall select a third appraiser and the fair market value shall be deemed to be the average of the three (3) independent appraisals. Nothing contained herein
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, Crave has the right to purchase a franchised business from a franchisee at any time during the term of the Franchise Agreement. To do so, Crave must provide written notice to the franchisee indicating they are exercising their option to purchase the business. This purchase includes all leasehold improvements, equipment, furniture, fixtures, signs, inventory, and the lease or sublease for the location. Crave also has the unrestricted right to assign this purchase option to another party.
The purchase price for the franchised business will be the fair market value of the assets, determined as of the date of Crave's written notice. This valuation will consider reasonable depreciation of leasehold improvements and the equipment, furniture, fixtures, signs, and inventory. However, the purchase price will not include any value attributed to trademarks, service marks, commercial symbols, goodwill, or the business's "going concern" value. Crave can also exclude any assets that do not meet their quality standards. The remaining term of the lease or sublease will also factor into the fair market value assessment.
If Crave and the franchisee cannot agree on the fair market value, an independent appraiser will determine the value. If they cannot agree on a single appraiser, each party will select an appraiser, and those two appraisers will then select a third. The fair market value will then be the average of the three independent appraisals. This process ensures a more objective valuation of the business assets in case of disagreement.
This clause in the Franchise Agreement means that a Crave franchisee could be required to sell their business back to the franchisor at any point during the agreement's term. The franchisee should pay close attention to how the fair market value is determined, as it excludes intangible assets like brand value and goodwill, which could significantly impact the final purchase price. Franchisees should be prepared to negotiate the valuation and, if necessary, engage in the appraisal process to ensure they receive a fair price for their business assets.