When does the closing occur for the purchase of Purchased Assets by Crisp & Green?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
- (d) If we exercise our option to purchase, fifty percent (50%) of the purchase price for the Purchased Assets will be paid in cash at the closing, which will occur at the place, time and date we designate, but not later than sixty (60) days after the exercise of our option to purchase the Purchased Assets. At the closing, we will be entitled to all warranties, title insurance policies and other closing documents and post-closing indemnifications as we reasonably require, including: (i) instruments transferring good and merchantable title to the Purchased Assets, free and clear of all liens, encumbrances, and liabilities, to us or our designee, with all sales and other transfer taxes paid by you; and (ii) an assignment of all leases of personal property and real estate used in the operation of the Franchised Restaurant, including land, building and/or equipment (or if an assignment is prohibited, a sublease to us or our designee for the full remaining term and on the same terms and conditions as your lease, including renewal and/or purchase options), provided, however, that if any of your Principal Owners or Affiliates directly or indirectly owns the land and/or building of the Franchised Restaurant, then you will, at our option, cause such Principal Owner or Affiliate to grant to us a lease, as set forth below. Twenty-five percent (25%) of the purchase price (plus accrued and unpaid interest on the unpaid balance, at the Prime Rate, as defined below, from and after the closing date) shall be payable on the first anniversary of the closing date, and the remaining twenty-five percent (25%) of the purchase price (plus accrued and unpaid interest on the unpaid balance, at the Prime Rate, from and after the closing date) shall be payable on the second anniversary of the closing date. The "Prime Rate" shall be the published prime rate as of the date of closing of The Chase Manhattan Bank or any other national bank we select.
Source: Item 23 — RECEIPTS (FDD pages 66–252)
What This Means (2024 FDD)
According to Crisp & Green's 2024 Franchise Disclosure Document, if Crisp & Green exercises its option to purchase the Purchased Assets, the closing will occur at a location, time, and date that Crisp & Green designates. However, this closing date will not be later than 60 days after Crisp & Green exercises its option to purchase the Purchased Assets. At the closing, Crisp & Green will pay 50% of the purchase price in cash.
At closing, Crisp & Green is entitled to warranties, title insurance policies, closing documents, and post-closing indemnifications that they reasonably require. This includes instruments transferring good and merchantable title to the Purchased Assets, free of liens and liabilities, to Crisp & Green or their designee, with all sales and transfer taxes paid by the seller. It also includes an assignment of all personal property and real estate leases used in the Franchised Restaurant's operation, or a sublease if assignment is prohibited.
The remaining purchase price is structured with 25% payable on the first anniversary of the closing date, and the final 25% payable on the second anniversary of the closing date. Both deferred payments accrue interest from the closing date at the Prime Rate, which is defined as the published prime rate of The Chase Manhattan Bank or any other national bank Crisp & Green selects as of the closing date.
This arrangement provides a seller with a structured payout over two years, while Crisp & Green gains control of the assets relatively quickly after exercising their purchase option. The interest on the deferred payments could represent additional income for the seller, but the rate is subject to the Prime Rate at the time of closing, which could fluctuate.