What assets are included in the option for Hyper Kidz to purchase my Hyper Kidz Business?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
Upon termination of this Agreement by us in accordance with its terms and conditions or upon expiration of this Agreement without the grant of a Renewal Franchise, we shall have the option to purchase from you all or a portion of the assets used in the Hyper Kidz Business. We may exercise this option by giving written notice thereof within sixty (60) days from the date of such expiration or termination. Assets shall include, without limitation, leasehold improvements, equipment, furniture, fixtures, signs, inventory and the lease or sublease for the Site. We shall have the unrestricted right to assign this option to purchase. We or our assignee shall be entitled to all customary warranties and representations given by the seller of a business including, without limitation, representations and warranties as to (a) ownership, condition and title to assets; (b) liens and encumbrances relating to the assets; (c) validity of contracts inuring to us or affecting the assets; and (d) contingent or other liabilities.
The purchase price for the assets of the Hyper Kidz Business shall be the fair market value determined as of the date of termination of expiration of this Agreement in a manner consistent with reasonable depreciation of leasehold improvements owned by you and the equipment, furniture, fixtures, signs and inventory of the Hyper Kidz Business. The purchase price shall not contain any factor or increment for any trademark, service mark or other commercial symbol used in connection with the operation of the Hyper Kidz Business, goodwill or "going concern" value for the Hyper Kidz Business. We may exclude from the assets purchased hereunder any equipment, furniture, fixtures, signs and inventory that are not approved as meeting quality standards for Hyper Kidz Businesses. The length of the remaining term of the lease or sublease for the Site of the Hyper Kidz Business shall also be considered in determining the fair market value hereunder. If we and you are unable to agree on the fair market value of the assets, the fair market value shall be determined by an independent appraiser selected by us and you. If we and you are unable to agree on an appraiser, we shall each select one (1) appraiser who shall select a third appraiser and the fair market value shall be deemed to be the average of the three (3) independent appraisals. Nothing contained herein shall restrict the manner in which the appraisers so selected value the leasehold improvements, equipment, furniture, fixtures, signs and inventory.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, if the franchise agreement is terminated by Hyper Kidz or expires without renewal, Hyper Kidz has the option to purchase some or all of the assets used in the Hyper Kidz Business. These assets include leasehold improvements, equipment, furniture, fixtures, signs, inventory, and the lease or sublease for the site. Hyper Kidz has the right to assign this purchase option to another party.
The purchase price will be the fair market value of the assets, determined on the date of termination or expiration of the agreement. This valuation will consider reasonable depreciation of leasehold improvements, equipment, furniture, fixtures, signs, and inventory. However, the purchase price will not include any value for trademarks, service marks, goodwill, or the business's "going concern" value. Hyper Kidz can exclude any assets that do not meet their quality standards. The remaining term of the lease or sublease will also be factored into the fair market value.
If Hyper Kidz and the franchisee cannot agree on the fair market value, an independent appraiser will determine the value. If they cannot agree on an appraiser, each party will select an appraiser, and those two appraisers will select a third. The fair market value will then be the average of the three appraisals. The method used by the appraisers to value the leasehold improvements, equipment, furniture, fixtures, signs, and inventory is not restricted.