What is the basis for the appraiser's valuation of the Dq Treat restaurant's assets?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
14.5 Purchase Option. Company may purchase or designate a third party to purchase any or all of the assets of the Restaurant that are owned by Licensee or any of Licensee's affiliates including the land, building, equipment, fixtures, signage, furnishings, supplies, leasehold, leasehold improvements, and inventory of the Restaurant, upon the following conditions:
(A) Company must give Licensee written notice of its intent to exercise its purchase rights under this section 14.5 within 30 days after the date of the expiration or termination of this agreement.
(B) The purchase will be at a price determined by a qualified appraiser paid for by Company and selected with the consent of both parties.
The price determined by the appraiser will be the reasonable fair market value of the assets based on their continuing use in, as, and for the operation of a DQ® Treat restaurant and the appraiser will designate a price for each category of asset (e.g., land, building, equipment, fixtures, etc. but not good will).
If the parties cannot agree upon an appraiser, either party may petition a judge of the United States district court for the district in which the Authorized Location is located to appoint an appraiser.
Source: Item 17 — The following paragraph is added to the end of Item 17 of the Disclosure Document: (FDD pages 70–378)
What This Means (2025 FDD)
According to the 2025 Dq Treat FDD, if the company exercises its option to purchase the assets of a restaurant from a franchisee upon termination or expiration of the franchise agreement, a qualified appraiser will determine the purchase price. The appraiser, selected with the consent of both Dq Treat and the franchisee, will be paid for by Dq Treat.
The appraiser will determine the reasonable fair market value of the assets based on their continuing use in the operation of a Dq Treat restaurant. This means the valuation will consider how the assets contribute to the ongoing operation of the business, rather than their liquidation value or some other alternative use. The appraisal will designate a price for each category of asset, such as land, building, equipment, and fixtures.
Importantly, the appraisal will not include any value for goodwill, which is the intangible value of the business related to its brand reputation, customer relationships, and other factors. If the parties cannot agree on an appraiser, either party can petition a judge of the United States district court for the district in which the Authorized Location is located to appoint an appraiser.