What standards does Itan use to determine the value of assets acquired from a franchise?
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 purchase price for assets Itan acquires from a franchisee will be determined either through mutual agreement between the parties or through an appraisal process. If both parties agree on a purchase price, that price will be used. If an agreement cannot be reached, the "Appraised Value" will be used, which means the fair market value of the acquired assets as of the date the franchise agreement terminates or expires. However, the fair market value will not include any value for goodwill or the franchise rights granted by the agreement.
The appraisal process involves both Itan and the franchisee attempting to agree on a single independent appraiser. If they cannot agree, each party will appoint an appraiser within 15 days of a demand for appraisers. The two appointed appraisers will then jointly appoint a third appraiser within 30 days of the initial demand. If either party fails to appoint an appraiser within the specified timeframe, the appraiser appointed by the other party will be deemed the single appraiser approved by both parties.
The franchisee is required to provide any documents or information requested by the appraisers. This process ensures that the asset valuation is based on fair market value, determined by independent experts, and excludes intangible assets like goodwill, which are tied to the Itan brand itself rather than the franchisee's individual efforts. This is a fairly standard approach in franchising to ensure a fair and objective valuation of tangible assets during a buy-back scenario.