Does Pump It Up have a security interest in a franchisee's business assets?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
21. OUR OPTION TO PURCHASE CERTAIN ASSETS OF THE FRANCHISED BUSINESS
- A. Scope. Upon the expiration or termination of this Agreement for any reason, we will provide written notice to you, within 30 days after the effective date of termination or expiration, if we intend to exercise our option to purchase from you some or all of the assets used in the Franchised Business (the "Assets"). As used in this Section 21, the term "Assets" means and includes, without limitation, leasehold improvements, equipment, vehicles, furnishings, fixtures, signs and inventory (non-perishable products, materials and supplies) used in the Franchised Business, real estate interests (including the fee simple rights or the Lease), and any licenses necessary to operate the Franchised Business. We have the unrestricted right to assign this option to purchase the Assets. We or our assignee will be entitled to all customary representations and warranties that the Assets are free and clear (or, if not, accurate and complete disclosure) as to: (1) ownership, condition and title; (2) liens and encumbrances; (3) environmental and hazardous substances; and (4) validity of contracts and liabilities inuring to us or affecting the Assets, whether contingent or otherwise.
- B. Purchase Price. The purchase price for the Assets ("Purchase Price") will be the fair market value of the Assets (or, for leased assets, the fair market value of your Lease), determined as of the effective date of purchase in a manner that accounts for customary depreciation and condition of the Assets; provided, however, that the Purchase Price will take into account the termination of this Agreement. Further, the Purchase Price for the Assets will not contain any factor or increment for any trademark, service mark or other commercial symbol used in connection with the operation of the Franchised Business nor any goodwill or "going concern" value for the Franchised Business. We may exclude from the Assets purchased in accordance with this Section any equipment, vehicles, furnishings, fixtures, signs, and
inventory that are not approved as meeting then-current standards for a Pump It Up Business or for which you cannot deliver a Bill of Sale in a form satisfactory to us.
- C.
Certified Appraisers.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 47–50)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, Pump It Up has an option to purchase certain assets of the franchised business upon the expiration or termination of the Franchise Agreement. Pump It Up will provide written notice within 30 days after the effective date of termination or expiration if they intend to exercise this option.
The assets Pump It Up may purchase include leasehold improvements, equipment, vehicles, furnishings, fixtures, signs, inventory (non-perishable products, materials, and supplies), real estate interests (including fee simple rights or the Lease), and any licenses necessary to operate the Franchised Business. Pump It Up has the unrestricted right to assign this option to purchase the Assets.
The purchase price for the assets will be the fair market value of the assets (or the fair market value of the lease for leased assets), determined as of the effective date of purchase, accounting for customary depreciation and the condition of the assets. However, the purchase price will not include any factor for trademarks, service marks, or goodwill. Pump It Up may exclude assets that do not meet the current standards for a Pump It Up Business or for which the franchisee cannot deliver a satisfactory Bill of Sale.
Pump It Up is entitled to customary representations and warranties that the assets are free and clear regarding ownership, condition, title, liens, encumbrances, environmental and hazardous substances, and the validity of contracts and liabilities. This arrangement protects Pump It Up by ensuring they can acquire the assets of a terminated or expired franchise, while also giving them the ability to ensure the assets meet their standards and are free of encumbrances.