What is the real estate option granted to Goldfish Swim School Franchising, LLC by the franchisee?
Goldfish_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
WHEREAS, the Franchise Agreement requires that Goldfish approve the location for the Franchise Store to be established pursuant to the above referenced Franchise Agreement, that approval being conditioned upon the execution of this Real Estate Option to Purchase in the event Franchisee owns or controls the real estate;
WHEREAS, Franchisee seeks Goldfish's approval for particular real estate.
NOW THEREFORE, it is hereby agreed as follows:
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- Option. Franchisee hereby grants to Goldfish the option to purchase the real estate described in Exhibit "A" (and hereinafter referred to as the "Real Estate") upon the expiration without renewal or termination of the Franchise Agreement. Any transfer, renewal, extension, or amendment of the Franchise Agreement shall not affect this Option Agreement unless expressly provided. The terms of the Option rights are as follows:
A. Exercise of Option. Within fifteen (15) days following the termination or expiration without renewal of the Franchise Agreement as provided for in the Franchise Agreement, Goldfish may notify Franchisee in writing of its intention to exercise this option to purchase the Real Estate, and which notice shall constitute an agreement to purchase the Real Estate conditioned upon Goldfish obtaining any necessary financing and the Real Estate being inspected for environmental law compliance. The closing of the sale shall occur as soon as all documentation and other matters have been completed, including obtaining any necessary financing and environmental inspections, but in any event not later than one hundred twenty (120) days after the date upon which the fair market value of the Real Estate is established, as provided in Paragraph B below, unless the parties hereto agree to a later closing date.
B. Fair Market Value.
The parties will attempt to agree upon a fair price for the purchase of the Real Estate, but upon failing to do so within thirty (30) days from the date of the exercise of this option by Goldfish, Goldfish shall select and pay for the services of a qualified appraiser to establish the fair market value of the Real Estate, and a copy of that appraisal shall be provided to Franchisee.
Within ten (10) days after Franchisee receives the written appraisal, Franchisee shall advise Goldfish, in writing, as to whether Franchisee accepts the appraisal.
Source: Item 23 — RECEIPTS (FDD pages 77–389)
What This Means (2025 FDD)
According to Goldfish Swim School's 2025 Franchise Disclosure Document, a franchisee grants Goldfish Swim School Franchising, LLC the option to purchase the real estate associated with the franchise. This option becomes exercisable upon the expiration or termination of the Franchise Agreement without renewal. Goldfish Swim School has fifteen days following the termination or expiration of the Franchise Agreement to notify the franchisee in writing of its intent to exercise this purchase option. This notice then constitutes an agreement to purchase the real estate, but is conditional upon Goldfish Swim School obtaining necessary financing and completing environmental compliance inspections.
The closing of the real estate sale must occur within 120 days after the fair market value of the real estate is established, unless both parties agree to a later date. The FDD states that Goldfish Swim School and the franchisee will first attempt to agree on a fair price for the real estate. However, if they fail to agree within 30 days from the date Goldfish Swim School exercises its option, Goldfish Swim School will select and pay for a qualified appraiser to determine the real estate's fair market value. The franchisee then has ten days after receiving the appraisal to either accept or reject it in writing.
This real estate option ensures that Goldfish Swim School has the opportunity to maintain control over the location of a franchise even after the Franchise Agreement ends. For a prospective franchisee, this means that the franchisor could potentially purchase their property at the end of the franchise term. It is important for franchisees to understand the terms of the option, including how the fair market value is determined and the timeline for exercising the option, as these factors can significantly impact their investment and exit strategy.