What must Fly To Fit Franchise do to exercise its purchase option?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
When this Agreement expires or is terminated, Fly To Fit Franchise will have the right (but not the obligation) to purchase any or all of the assets related to the Business, and/or to require Franchisee to assign its lease or sublease to Fly To Fit Franchise.
To exercise this option, Fly To Fit Franchise must notify Franchisee no later than 30 days after this Agreement
expires or is terminated. The purchase price for all assets that Fly To Fit Franchise elects to purchase will be the lower of (i) the book value of such assets as declared on Franchisee's last filed tax returns or (ii) the fair market value of the assets. If the parties cannot agree on fair market value within 30 days after the exercise notice, the fair market value will be determined by an independent appraiser reasonably acceptable to both parties. The parties will equally share the cost of the appraisal. Fly To Fit Franchise's purchase will be of assets only (free and clear of all liens), and the purchase will not include any liabilities of Franchisee. The purchase price for assets will not include any factor or increment for any trademark or other commercial symbol used in the business, the value of any intangible assets, or any goodwill or "going concern" value for the Business. Fly To Fit Franchise may withdraw its exercise of the purchase option at any time before it pays for the assets. Franchisee will sign a bill of sale for the purchased assets and any other transfer documents reasonably requested by Fly To Fit Franchise. If Fly To Fit Franchise exercises the purchase option, Fly To Fit Franchise may deduct from the purchase price: (a) all amounts due from Franchisee; (b) Franchisee's portion of the cost of any appraisal conducted hereunder; and (c) amounts paid or to be paid by Fly To Fit Franchise to cure defaults under Franchisee's lease and/or amounts owed by Franchisee to third parties. If any of the assets are subject to a lien, Fly To Fit Franchise may pay a portion of the purchase price directly to the lienholder to pay off such lien. Fly To Fit Franchise may withhold 25% of the purchase price for 90 days to ensure that all of Franchisee's taxes and other liabilities are paid. Fly To Fit Franchise may assign this purchase option to another party.
Source: Item 22 — CONTRACTS (FDD page 44)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, Fly To Fit has the option to purchase the assets of the franchise when the agreement expires or is terminated. To exercise this purchase option, Fly To Fit must notify the franchisee within 30 days after the franchise agreement expires or is terminated.
The purchase price for the assets Fly To Fit elects to purchase will be the lower of either the book value of the assets as declared on the franchisee's last filed tax returns, or the fair market value of the assets. If Fly To Fit and the franchisee cannot agree on the fair market value within 30 days after the exercise notice, an independent appraiser, reasonably acceptable to both parties, will determine the fair market value. The cost of the appraisal will be equally shared between Fly To Fit and the franchisee.
Fly To Fit's purchase will be for assets only, free and clear of all liens, and will not include any liabilities of the franchisee. The purchase price will not include any factor for trademarks, intangible assets, or goodwill. Fly To Fit can withdraw its exercise of the purchase option before paying for the assets. The franchisee will sign a bill of sale and any other transfer documents requested by Fly To Fit. Fly To Fit may deduct from the purchase price any amounts due from the franchisee, the franchisee's share of the appraisal cost, and amounts paid by Fly To Fit to cure defaults under the franchisee's lease or amounts owed to third parties. Fly To Fit may pay a portion of the purchase price directly to a lienholder to pay off any liens on the assets and may withhold 25% of the purchase price for 90 days to ensure all of the franchisee's taxes and other liabilities are paid. Fly To Fit also has the right to assign this purchase option to another party.