How is the purchase price determined for the interest of a deceased or permanently disabled person in a Jersey Mikes franchise if Jersey Mikes exercises its option to purchase?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
If any of the Franchise's Principals fail to sign a binding contract of sale before the one hundred twenty (120)-day selling period expires, or (i) if a contract is signed, but the proposed sale is not concluded within thirty (30) days after Franchisor relinquishes its option under Section 19.7, Franchisor will have an additional option during the next following thirty (30) days to purchase the interest the deceased or Per manently Disabled person held at the date of death or Permanent Disability.
Franchisor has the unrestricted right to assign the purchase right outlined in this Section 19.8.
The purchase price for the interest will be its fair m arket value, determined through
Source: Item 22 — CONTRACTS (FDD page 77)
What This Means (2025 FDD)
According to Jersey Mikes's 2025 Franchise Disclosure Document, if a Principal in a Jersey Mikes franchise dies or becomes permanently disabled, and this results in a change in executive-level responsibility, Jersey Mikes has specific options regarding the purchase of the deceased or disabled person's interest. Initially, the surviving Principals have 120 days to either find a new Controlling Principal acceptable to Jersey Mikes or sign a contract to sell the franchise to a buyer approved by Jersey Mikes. This proposed sale is subject to Jersey Mikes's right of first refusal.
If the surviving Principals fail to either find a suitable replacement or finalize a sale within the 120-day period, Jersey Mikes has an additional 30-day option to purchase the interest held by the deceased or permanently disabled person at the time of their death or disability. Jersey Mikes also retains the right to assign this purchase option to another party.
The purchase price for the interest will be its fair market value. The fair market value will be determined through negotiations or by appraisal. Unless the parties agree otherwise, the purchase price is payable in cash at closing. If Jersey Mikes provides written notice of its intent to exercise this option within the 30-day period, the option is considered effectively exercised, regardless of whether the purchase is completed within that timeframe. This ensures that the process moves forward once Jersey Mikes has formally indicated its intention to purchase the interest.