What is the definition of 'Acquired Assets' according to the Itan Franchise Agreement?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
If we choose to exercise our purchase option, we will notify you of the assets we wish to purchase (the "Acquired Assets") within 20 days after the termination or expiration date.
If we exercise our purchase option we may require that: (i) you assign your lease to us at no additional charge (if you lease the premises); or (ii) you or your affiliate enter into a lease with us upon standard and commercially reasonable leasing terms, including rent at fair rental value, for a term of 10 years or such shorter term that we specify (if you or your affiliate own the real estate).
The purchase price for the Acquired Assets will be: (i) the purchase price established by the parties (if mutually agreed upon); or (ii) the Appraised Value established in accordance with §21.2(b) below.
We may, at our option, assign our purchase option to a designee of our choosing.
- (b) Appraisal Process.
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.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the term "Acquired Assets" is used in the context of Itan potentially exercising a purchase option upon the termination or expiration of the franchise agreement. If Itan chooses to exercise this option, they will notify the franchisee of the specific assets they wish to purchase within 20 days of the termination or expiration date.
The purchase price for these Acquired Assets will be determined either by mutual agreement between Itan and the franchisee or, if they cannot agree, by an appraised value. The "Appraised Value" is defined as the fair market value of the Acquired Assets as of the date of termination or expiration of the agreement. However, this fair market value specifically excludes any value attributed to goodwill and/or the franchise rights granted by the agreement.
This process involves potentially hiring independent appraisers to determine the fair market value. If Itan and the franchisee cannot agree on a single appraiser, each party will appoint one appraiser, and those two appraisers will then jointly appoint a third. The franchisee is obligated to provide any documents or information requested by the appraisers to facilitate the valuation process. This ensures a structured approach to valuing the assets should Itan decide to purchase them at the end of the franchise term.