factual

At what price will Kidokinetics purchase the franchisee's equipment related to the Kidokinetics business upon termination or expiration?

Kidokinetics Franchise · 2024 FDD

Answer from 2024 FDD Document

  • 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.

Source: Item 22 — CONTRACTS (FDD page 59)

What This Means (2024 FDD)

According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics has the option, but not the obligation, to purchase a franchisee's equipment, vehicles, signs, fixtures, advertising materials, and supplies related to the Kidokinetics business if the franchise agreement is terminated or expires. Kidokinetics must exercise this option within 30 days of the termination or expiration date.

The purchase price will be the franchisee's cost or the fair market value of the assets, whichever is less. The assets must be free and clear of any liens or encumbrances. Kidokinetics will not assume any 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. Each party will select one appraiser, and 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 any fees due from the franchisee, any amounts owed to Kidokinetics or its affiliates, and any costs incurred in connection with any escrow arrangement against any payment. The closing of the purchase will occur no later than 30 days after the fair market value is determined.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.