What is the definition of 'Appraised Value' 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.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, "Appraised Value" refers to the fair market value of the Acquired Assets. This valuation is determined by independent appraisers, as outlined in Section 21.2(b) of the Itan Franchise Agreement. The appraised value is used to determine the purchase price of assets should Itan choose to exercise its purchase option upon termination or expiration of the franchise agreement.
Specifically, the "Appraised Value" is defined as the fair market value of the Acquired Assets as of the date the Itan Franchise Agreement is terminated or expires. However, this fair market value explicitly excludes any value attributed to goodwill and/or the franchise rights granted by the agreement. This distinction is important because it ensures that the franchisee is not compensated for the brand recognition or franchise system itself, but rather for the tangible assets acquired by Itan.
The appraisal process, as detailed in the FDD, involves both parties attempting to agree on a single independent appraiser. If they cannot reach an agreement, each party will appoint an appraiser, and those two appraisers will then jointly appoint a third. If a party fails to appoint an appraiser within 15 days of a demand for appraisers, the other party's appraiser will be deemed the single appraiser. This process ensures that the valuation is conducted fairly and independently, even if the parties disagree on the initial valuation. Franchisees must provide any documents or information requested by the appraisers.