After termination of a Floors To Go franchise, does Floors To Go have an obligation to purchase the franchisee's assets?
Floors_To_Go Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
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 by either Floors To Go or the franchisee, the franchisee will not have any interest in the goodwill or intangibles of the franchised business or equity in the franchise, except for the leasehold, fixtures, equipment, and supplies purchased by the franchisee.
Floors To Go has the right, but not the duty, to purchase certain assets from the franchisee. This includes improvements, equipment, advertising and promotional materials, products, supplies, inventory, and any other items bearing Floors To Go's Marks. Floors To Go must exercise this right within thirty (30) days after termination or expiration of the agreement by providing notice of intent. However, in Hawaii, Floors To Go is required to purchase these assets under Hawaii Rev. Stats. § 482E-6(3).
The purchase price for these assets will be the current fair market value. If the franchisee and Floors To Go cannot agree on a fair market value, an independent appraiser will be designated to determine the value, and this determination will be binding. If Floors To Go chooses to purchase these assets, it has the right to offset any amounts owed to it by the franchisee under the agreement, as well as the cost of the appraisal, against the payments for the assets.