How is the 'Agreed Value' of the Purchased Assets determined for a Crisp & Green franchise?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
16.04 Option to Purchase Franchised Restaurant.
- (a) Upon termination or expiration (without renewal) of this Agreement, we have the right, exercisable by giving notice thereof ("Appraisal Notice") within ten (10) days after the date of such termination or expiration, to require that a determination be made of the "Agreed Value" (as defined below) of all the personal property used in the Franchised Restaurant which you own, including inventory of non-perishable products, materials, supplies, furniture, equipment, signs, but excluding any cash and short-term investments and any items not meeting our specifications for Restaurants (the "Purchased Assets"). Upon such notice, you may not sell or remove any of the personal property of the Franchised Restaurant from the Premises and must give us, our designated agents and the "Appraiser" (as defined below) full access to the Franchised Restaurant and all of your books and records at any time during customary business hours in order to conduct inventories and determine the purchase price for the Purchased Assets.
- (b) The Agreed Value shall be determined by consultation between you and us. If you and we are unable to agree on the Agreed Value of the Purchased Assets within fifteen (15) days after the Appraisal Notice, then the Agreed Value will be the Fair Market Value, consisting of the amount which an arm's length purchaser would be willing to pay for the Purchased Assets, less the cost of any required remodeling of the Franchised Premises if we have exercised our option on the lease.
Source: Item 23 — RECEIPTS (FDD pages 66–252)
What This Means (2024 FDD)
According to Crisp & Green's 2024 Franchise Disclosure Document, the 'Agreed Value' of Purchased Assets is determined through a consultation between the franchisee and Crisp & Green. If both parties can come to an agreement within 15 days after the Appraisal Notice, that value will be used.
If an agreement cannot be reached within the specified timeframe, the 'Agreed Value' will default to the Fair Market Value. This Fair Market Value is defined as the amount a third-party purchaser would be willing to pay for the assets. This amount is further reduced by the cost of any required remodeling of the Franchised Premises, assuming Crisp & Green has exercised its option on the lease.
This process ensures that the franchisee receives a fair price for their assets upon termination or expiration of the franchise agreement, while also protecting Crisp & Green from overpaying. The deduction for remodeling costs is a critical point for franchisees to consider, as it can significantly impact the final value of the purchased assets. Franchisees should seek clarity on how these remodeling costs are assessed and what criteria are used to determine their necessity.