What happens if the two appraisals for the Gold Star real property differ by more than 10%?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
If the purchase price of the real property is determined by appraisal, the two appraisals will be averaged to determine the purchase price; provided, however, that if the two appraisals differ by more than 10%, then, unless the COMPANY and FRANCHISEE agree in writing to a purchase price within 30 days after receipt of the second appraisal, the two appraisers will select a mutually agreeable third appraiser who will solely determine the purchase price.
Source: Item 23 — Receipts (FDD pages 53–163)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, if the company exercises its option to purchase the franchisee's real property and the purchase price is determined by two independent appraisals, several steps are followed to resolve potential discrepancies. Initially, the two appraisals are averaged to determine the purchase price. However, if the two appraisals differ by more than 10%, the process requires further negotiation or a third appraisal.
Specifically, if the initial appraisals diverge by more than 10%, Gold Star and the franchisee have a 30-day window after receiving the second appraisal to reach a written agreement on the purchase price. This allows both parties to negotiate and potentially avoid further appraisal costs and delays. If an agreement cannot be reached within this period, a third, mutually agreeable appraiser is selected by the initial two appraisers.
The role of the third appraiser is to solely determine the purchase price. This decision is final and binding, ensuring that a fair market value is established for the real property. This process aims to provide an equitable solution in cases where the initial appraisals vary significantly, protecting the interests of both Gold Star and the franchisee during the property purchase.