Under what circumstances does Golden Krust Caribbean Restaurant have the option to purchase the Restaurant from the franchisee?
Golden_Krust_Caribbean_Restaurant Franchise · 2024 FDDAnswer from 2024 FDD Document
ng such skills. Consequently, enforcement of the covenants made in 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.
(3) Purchase Price
The purchase price for the Restaurant will be its fair market value, determined in a manner consistent with reasonable depreciation of the Restaurant's equipment, signs, inventory, materials and supplies, provided that the Restaurant will be valued as an independent business and its value will not include any value for:
- (a) the franchise or any rights granted
Source: Item 22 — CONTRACTS (FDD page 35)
What This Means (2024 FDD)
According to the 2024 Franchise Disclosure Document, Golden Krust Caribbean Restaurant has the option to purchase the Restaurant from the franchisee upon the termination or expiration of the Franchise Agreement. To exercise this option, Golden Krust Caribbean Restaurant must provide written notice to the franchisee within 60 days from the date of termination or expiration. The date on which Golden Krust Caribbean Restaurant notifies the franchisee whether or not they are exercising their option is referred to as the "Notification Date". Golden Krust Caribbean Restaurant also has the unrestricted right to assign this option to purchase the Restaurant to another party.
If Golden Krust Caribbean Restaurant exercises its option to purchase the Restaurant, the purchase includes the leasehold rights to the premises. The franchisee must either assign their leasehold interest to Golden Krust Caribbean Restaurant or enter into a sublease for the remainder of the lease term under the same terms as the original lease, including renewal options.
The purchase price for the Restaurant will be its fair market value, determined in a manner consistent with reasonable depreciation of the Restaurant's equipment, signs, inventory, materials, and supplies. However, the valuation will exclude any value for the franchise itself, the Golden Krust Marks, or participation in the Golden Krust Caribbean Restaurant network. The fair market value will include the goodwill developed by the franchisee in the Restaurant's market, independent of the goodwill associated with the Golden Krust Marks and System. The remaining term of the lease for the premises will also be considered when determining the Restaurant's fair market value.