Does Golden Krust Caribbean Restaurant have the right to assign its option to purchase the Restaurant?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
n this Section will not deprive you of your personal goodwill or ability to earn a living.
If we find it necessary to enforce the provisions of Section XVI, you acknowledge that the Court has the power to enjoin you, your officers, agents, servants, employees and all others in active concert or participation with you.
E. OUR RIGHT TO PURCHASE RESTAURANT
(1) Exercise of Option
Upon the termination or expiration of this Agreement in accordance with its terms and conditions, we have the option, exercisable by giving written notice thereof to you within sixty (60) days from the date of such termination or expiration, to purchase the Restaurant from you, including the leasehold rights to the Premises. (The date on which we notify you whether or not we are exercising our option is referred to in this Agreement as the "Notification Date".) We have the unrestricted right to assign this option to purchase the Restaurant. We will be entitled to all customary warranties and representations in connection with our asset purchase, including, without limitation, representations and warranties as to ownership and condition of and title to assets; liens and encumbrances on assets; validity of contracts and agreements; and liabilities affecting the assets, contingent or otherwise.
(2) Leasehold Rights
You agree at our election:
- (a) to assign your leasehold interest in the Premises to us; or
- (b) to enter into a sublease for the remainder of the lease term on the same terms (including renewal options) as the prime lease.
Source: Item 22 — CONTRACTS (FDD page 35)
What This Means (2024 FDD)
According to Golden Krust Caribbean Restaurant's 2024 Franchise Disclosure Document, Golden Krust Caribbean Restaurant has the unrestricted right to assign its option to purchase the restaurant. This option becomes exercisable upon the termination or expiration of the Franchise Agreement. Golden Krust Caribbean Restaurant must provide written notice to the franchisee within sixty (60) days from the date of termination or expiration to exercise this option.
This means that if a franchisee's agreement ends, Golden Krust Caribbean Restaurant has the right to buy the restaurant back. Moreover, Golden Krust Caribbean Restaurant can transfer this right to another party, allowing someone else to purchase the restaurant instead. This gives Golden Krust Caribbean Restaurant flexibility in how they handle the transition of a restaurant location after a franchise agreement ends.
The purchase would include the leasehold rights to the premises. The price will be the fair market value, but will not include the value of the franchise itself, the Golden Krust Caribbean Restaurant marks, or participation in the Golden Krust Caribbean Restaurant network. The fair market value will include the goodwill the franchisee developed independent of the Golden Krust Caribbean Restaurant brand, and the length of the remaining lease term will be considered.