How is 'Appraised Value' determined for Acquired Assets in the Itan franchise agreement?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
If the parties cannot agree on the purchase price, the purchase price shall be the Appraised Value established in accordance with this Section. "Appraised Value" means the fair market value of the Acquired Assets as of the date this Agreement is terminated or expires, as applicable; provided, however, that fair market value shall not include any value for goodwill and/or the franchise rights granted by this Agreement.
The parties shall attempt to mutually agree upon a single independent appraiser.
If they fail to do so, either party may demand the appointment of three (3) appraisers in accordance with the following: (i) no later than 15 days after the demand, each party shall appoint one (1) appraiser and notify the other party of the appointed appraiser's name and contact information; and (ii) no later than 30 days after the demand, the two (2) appraisers appointed by the parties will jointly appoint a third (3rd) appraiser.
If either party fails to appoint an appraiser within the 15-day period, then the appraiser appointed by the other party shall be deemed the single appraiser approved by the parties.
You must promptly provide any documents or information requested by the appraisers.
If a single appraiser is appointed, the purchase price shall be the Appraised Value established by the appraiser.
If three (3) appraisers are appointed, the purchase price shall be: (i) the Appraised Value agreed upon by at least two (2) of the appraisers; or (ii) the average of the two (2) Appraised Values that are closest to each other if none of the appraisers agree upon the Appraised Value.
Each party shall promptly pay 50% of the cost of the appraisal.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the 'Appraised Value' of acquired assets is determined through an appraisal process involving independent appraisers. 'Appraised Value' is defined as the fair market value of the acquired assets as of the date the franchise agreement terminates or expires. However, this valuation specifically excludes any value attributed to goodwill or the franchise rights granted by the agreement.
If Itan exercises its purchase option, the purchase price for the acquired assets will be either a mutually agreed-upon price between the parties or the 'Appraised Value' established through the appraisal process. If the parties cannot agree on a price, they will attempt to mutually select a single independent appraiser. If they fail to agree on a single appraiser, either party can demand the appointment of three appraisers. Each party then appoints one appraiser within 15 days, and those two appraisers jointly appoint a third appraiser within 30 days of the initial demand.
If a single appraiser is appointed, their valuation determines the 'Appraised Value'. If three appraisers are involved, the purchase price is either the value agreed upon by at least two of the appraisers, or the average of the two closest appraised values if no consensus is reached. If a party fails to appoint an appraiser within the 15-day timeframe, the appraiser selected by the other party is considered the single, approved appraiser. Each party is responsible for paying 50% of the appraisal costs.
This process ensures an independent and fair valuation of the assets, protecting both Itan and the franchisee. However, franchisees should note that the exclusion of goodwill from the valuation could result in a lower purchase price than anticipated, as goodwill often represents a significant portion of a business's value. Franchisees should also be prepared to provide any documents or information requested by the appraisers to facilitate the valuation process.