Under what circumstances does Hyper Kidz have the option to purchase the assets of my Hyper Kidz Business?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
ement for the operation of any Hyper Kidz Business, or any entity owning, controlling or operating a Hyper Kidz Business or from providing services to a Hyper Kidz Business.
19.5 Continuing Obligations
All obligations of ours and yours which expressly or by their nature survive or are intended to survive the expiration or termination of this Agreement shall continue in full force and effect subsequent to and notwithstanding its expiration or termination and until they are satisfied in full or by their nature expire.
19.6 Our Right to Purchase Assets of the Hyper Kidz Business
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.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, Hyper Kidz has the option to purchase the assets of your Hyper Kidz Business under two primary circumstances: if Hyper Kidz terminates the Franchise Agreement according to its terms and conditions, or if the Franchise Agreement expires without you being granted a Renewal Franchise. This provision allows Hyper Kidz to maintain control over the brand and its locations.
If either of these conditions is met, Hyper Kidz can exercise its option to purchase the assets by providing written notice within 60 days from the date of termination or expiration. The assets subject to purchase include leasehold improvements, equipment, furniture, fixtures, signs, inventory, and the lease or sublease for the site. Hyper Kidz also has the unrestricted right to assign this purchase option to another party.
The purchase price for these assets will be based on their fair market value as of the termination or expiration date, taking into account reasonable depreciation of leasehold improvements, equipment, furniture, fixtures, signs, and inventory. The valuation will not include any consideration for trademarks, service marks, goodwill, or the business's "going concern" value. Hyper Kidz may also exclude any assets that do not meet their quality standards, and the remaining term of the lease will be considered when determining fair market value. If you and Hyper Kidz cannot agree on the fair market value, an independent appraiser will determine it. If an agreement on an appraiser cannot be reached, each party will select an appraiser, and those two appraisers will select a third, with the average of the three appraisals determining the final fair market value.