What is the purpose of Exhibit B-1 in relation to the Floors To Go agreement?
Floors_To_Go Franchise · 2025 FDDAnswer from 2025 FDD Document
Exhibit B-1
Hawaii Amendment
In recognition of the requirements of the Hawaii Franchise Investment Law, Hawaii Rev. Stat. §§ 482E-1 et seq., the parties to the attached Membership Agreement (the "Agreement") agree to amend the Agreement as follows:
- Section 13 of the Agreement shall be supplemented by the addition of the following new Section 13.4, which shall be considered an integral part of the Agreement:
13.4 Your Interest Upon Termination.
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.
- Each provision of this Amendment shall be effective only to the extent, with respect to such provision, that the jurisdictional requirements of the Hawaii Franchise Investment Law are met independently without reference to this Hawaii Amendment.
Source: Item 23 — RECEIPTS (FDD pages 47–204)
What This Means (2025 FDD)
According to the 2025 Floors To Go Franchise Disclosure Document, Exhibit B-1 provides state-specific amendments to the Membership Agreement for franchisees in Hawaii. It acknowledges the requirements of the Hawaii Franchise Investment Law, Hawaii Rev. Stat. §§ 482E-1 et seq., and amends the agreement accordingly.
Specifically, Exhibit B-1 supplements Section 13 of the agreement by adding a new Section 13.4, which is considered an integral part of the agreement. This new section, titled "Your Interest Upon Termination," outlines what happens to the franchisee's interest in the business upon termination or non-renewal of the franchise agreement.
This amendment clarifies that the franchisee will not have any interest in the goodwill or intangibles of the franchised business, except for the leasehold, fixtures, equipment, and supplies they purchased. It also grants Floors To Go the right, but not the duty unless required by Hawaii law, to purchase certain assets bearing their marks at fair market value within 30 days of termination or expiration. The amendment also specifies the process for determining fair market value and allows Floors To Go to offset amounts owed against any payments for such purchases. Each provision of this amendment is effective only to the extent that the jurisdictional requirements of the Hawaii Franchise Investment Law are met independently.