Who pays for the independent appraiser's determination of value in a Pump It Up transfer disagreement?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) We have the right, exercisable within 10 days after receipt of the notice specified in Section 16.B(1), to send written notice to you that we intend to purchase the interest proposed
to be transferred. We may assign our right of first refusal to someone else either before or after we exercise it. Our right of first refusal will not apply to Transfers for Convenience of Ownership under Section 16.C. If the proposed Transfer is to be made pursuant to a sale, we or our designee may purchase the interest proposed to be transferred on the same economic terms and conditions offered by the third party. Closing on our purchase must occur within 60 days after the date of our notice to the seller electing to purchase the interest. If we cannot reasonably be expected to furnish the same consideration as the third party, then we may substitute the reasonable equivalent in cash. If, within 30 days, the parties cannot agree on the reasonable equivalent in cash, we will designate, at our expense, an independent appraiser, and the appraiser's determination of the value of the interest being sold will be final.
- (2) If the proposed Transfer is to be made by gift, and our right of first refusal applies to such a transfer, we will designate, at our expense, an independent appraiser to determine the fair market value of the interest proposed to be transferred.
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, the cost of an independent appraiser is determined by the type of transfer. If Pump It Up exercises its right of first refusal and the transfer is to be made by sale, Pump It Up will designate, at its expense, an independent appraiser if the parties cannot agree on the cash equivalent of the consideration within 30 days. If the proposed transfer is to be made by gift, Pump It Up will designate, at its expense, an independent appraiser to determine the fair market value of the interest proposed to be transferred.
This means that if a franchisee wants to transfer their Pump It Up franchise, and Pump It Up decides to exercise its right of first refusal, Pump It Up will cover the cost of the appraiser to determine the value of the franchise in certain situations. This is a notable benefit for the franchisee, as appraisal costs can be significant.
It is important for a prospective Pump It Up franchisee to understand the conditions under which Pump It Up will cover the appraiser's fees, as this can impact the financial aspects of transferring the franchise. Franchisees should carefully review the transfer provisions in the franchise agreement and consult with legal counsel to fully understand their rights and obligations.