Does Kidokinetics have the obligation to purchase equipment from the franchisee upon termination or expiration of the agreement?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
17.2. Right to Purchase.
- 17.2.1. Franchisor has the option, but not the obligation, to be exercised within thirty (30) days after termination or expiration of this Agreement, to purchase from Franchisee any or all of the equipment (including any point-of-sale system or computer systems), vehicles, signs, fixtures, advertising materials and supplies of Franchisee related to the operation of the Kidokinetics Business, at Franchisee's cost or fair market value, whichever is less. Franchisor will purchase Franchisee's assets free and clear of any liens, charges, encumbrances or security interests and Franchisor will assume no liabilities whatsoever, unless otherwise agreed to in writing by the parties. If the parties cannot agree on the fair market value within thirty (30) days of Franchisor's exercise of its option, fair market value will be determined by two (2) appraisers, with each party selecting one (1) appraiser, and the average of their determinations will be binding. In the event of such appraisal, each party will bear its own legal and other costs and split the appraisal fees equally. If Franchisor elects to exercise its option to purchase, it will have the right to set off (i) all fees for any such independent appraiser due from Franchisee, (ii) all amounts due from Franchisee to Franchisor or any of its affiliates and (iii) any costs incurred in connection with any escrow arrangement (including reasonable legal fees), against any payment and will pay the remaining amount in cash. Closing of the purchase will take place no later than thirty (30) days after determination of the fair market value.
- 17.2.2. With respect to the options described in Sections 17.2.1, Franchisee must deliver to Franchisor in a form satisfactory to Franchisor, such warranties, deeds, releases of lien, bills of sale, assignments and such other documents and instruments that Franchisor deems necessary in order to perfect Franchisor's title and possession in and to the properties being purchased or assigned and to meet the requirements of all tax and government authorities. If, at the time of closing, Franchisee has not obtained all of these certificates and other documents, Franchisor may, in its sole discretion, place the purchase price in escrow pending issuance of any required certificates or documents.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics does not have an obligation to purchase equipment from the franchisee upon termination or expiration of the franchise agreement. However, Kidokinetics does have the option to purchase equipment, but is not required to do so.
Kidokinetics has the option to purchase any or all of the franchisee's equipment, vehicles, signs, fixtures, advertising materials, and supplies related to the Kidokinetics business. This option must be exercised within 30 days after the termination or expiration of the agreement. The purchase price will be the franchisee's cost or the fair market value, whichever is less. Kidokinetics will only purchase assets free and clear of any liens, charges, encumbrances, or security interests and will assume no liabilities unless otherwise agreed to in writing.
If Kidokinetics and the franchisee cannot agree on the fair market value within 30 days of Kidokinetics exercising its option, the fair market value will be determined by two appraisers, one selected by each party. The average of their determinations will be binding. Each party will bear its own legal and other costs and split the appraisal fees equally. Kidokinetics has the right to offset certain fees and amounts due from the franchisee against any payment and will pay the remaining amount in cash. The closing of the purchase will take place no later than 30 days after the determination of the fair market value.
The franchisee must deliver all necessary warranties, deeds, releases of lien, bills of sale, assignments, and other documents to perfect Kidokinetics's title and possession of the properties being purchased. If the franchisee has not obtained all necessary certificates and other documents at the time of closing, Kidokinetics may place the purchase price in escrow pending the issuance of any required certificates or documents.