Can Mr. Sandless offset the purchase price of personal property by the amount I owe them?
Mr_Sandless Franchise · 2025 FDDAnswer from 2025 FDD Document
We or our assignee also have the option, but are not obligated, to purchase any personal property used in connection with operation of your Business by providing you written notice of our election within thirty (30) days after termination or expiration of this Agreement and paying you the book value for such personal property within thirty (30) days of such notice. For purposes of this Section, "book value" means the amount you actually paid for the personal property less depreciation (calculated by using the straightline depreciation method on a five (5) year depreciation schedule irrespective of the depreciation method or schedule you use for accounting purposes). Notwithstanding the foregoing, to the extent that we exercise our right to purchase any personal property that is subject to a lease or finance agreement, the purchase price of such personal property shall equal the amount of your remaining obligations under the lease or finance agreement, as applicable. We shall be entitled to offset the purchase price by the amount of money owed by you to us for any payments necessary to acquire clear title to property or for any other debt. If we exercise our option to purchase, pending the closing of such purchase, we have the right to appoint a manager to maintain operation of the Business, or we may require that you close the Business during such period without removing any assets. You are required to maintain in force all insurance policies required under this Agreement until the date of such closing.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2025 FDD)
According to Mr. Sandless's 2025 Franchise Disclosure Document, Mr. Sandless has the option to purchase any personal property used in connection with the operation of your business if they provide written notice within 30 days after the termination or expiration of the Franchise Agreement. If Mr. Sandless chooses to exercise this option, they will pay you the book value for the personal property within 30 days of the notice. The book value is defined as the amount you actually paid for the personal property less depreciation, calculated using the straight-line depreciation method on a five-year depreciation schedule, regardless of the depreciation method you use for accounting purposes.
However, if the personal property is subject to a lease or finance agreement, the purchase price will equal the amount of your remaining obligations under that lease or finance agreement. Importantly, Mr. Sandless is entitled to offset the purchase price by the amount of money you owe them, whether for payments necessary to acquire clear title to the property or for any other debt.
This means that if you owe Mr. Sandless money at the time of termination or expiration, they can reduce the amount they pay you for your personal property by the amount you owe them. This could significantly reduce the amount you receive for your personal property, especially if you have outstanding debts to Mr. Sandless. As a franchisee, it is important to maintain good financial standing with Mr. Sandless to avoid such offsets upon termination or expiration of the agreement.