What assets does Floors To Go have the right to purchase from the franchisee upon termination?
Floors_To_Go Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon termination or refusal to renew or extend the franchise either by us or you for any reason, you will have no interest in the goodwill or intangibles of the franchised business or equity in the franchise, apart from the leasehold, fixtures, equipment and supplies you have purchased. We shall have the right (but not the duty unless required by Hawaii Rev. Stats. § 482E-6(3)), to be exercised by notice of intent to do so within thirty (30) days after termination or expiration of this Agreement, to purchase any and all improvements, equipment, advertising and promotional materials, products, supplies, inventory and any other items bearing our Marks at current fair market value. If we cannot agree with you upon a fair market value within a reasonable time, we shall designate an independent appraiser, and the appraiser's determination of fair market value shall be binding. If we elect to exercise any option to purchase herein provided, we shall have the right to set-off all amounts due to us from you under this Agreement and the cost of the appraisal, if any, against any payments to be made for any such purchase.
Source: Item 23 — RECEIPTS (FDD pages 47–204)
What This Means (2025 FDD)
According to the 2025 Floors To Go Franchise Disclosure Document, upon termination or refusal to renew the franchise agreement, Floors To Go has the right to purchase certain assets from the franchisee. Specifically, Floors To Go can purchase any improvements, equipment, advertising and promotional materials, products, supplies, inventory, and any other items bearing their Marks. This right is not an obligation, unless required by Hawaii Rev. Stats. § 482E-6(3), and Floors To Go must provide notice of intent to purchase within 30 days after termination or expiration of the agreement.
The purchase price for these assets will be the current fair market value. If the franchisee and Floors To Go cannot agree on this value, an independent appraiser will be designated, and their determination will be binding. This valuation process ensures that the franchisee receives a fair price for the assets Floors To Go chooses to acquire.
Floors To Go also has the right to offset any amounts owed to them by the franchisee under the Franchise Agreement, as well as the cost of the appraisal, against any payments made for the purchased assets. This set-off provision could reduce the amount the franchisee receives for their assets if they have outstanding debts to Floors To Go. This is a common practice in franchising to protect the franchisor's financial interests and ensure all obligations are settled upon termination.