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Item 2.01.
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Completion of Acquisition or Disposition of Assets.
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The Franchise Purchase Agreements
On September 29, 2019, to finalize effecting the transition of the
Company’s branches from being Company-owned to being franchisee-owned, the Company entered into Asset Purchase Agreements
(“Purchase Agreements”) with a new franchisee (the “Buyer”) for the sale of certain assets related to the
operations of the Company’s branches in Coeur D’Alene, ID; Griffith, IN; Bloomington, Brooklyn Park, Cambridge, Hopkins,
St. Paul, and Wilmar, MN; Bismark, Dickinson, Fargo, Grand Forks, Minot, and Watford City, ND; Bellevue and Omaha, NE; Hillsboro,
OR; Sioux Falls, SD; and Bellingham, Everett, Kent, Mt. Vernon, Seattle, Spokane, Tacoma, and Vancouver, WA (collectively, the
“Franchise Assets”).
The closings under such agreements occurred on September 29, 2019.
The aggregate purchase price for the Franchise Assets consisted of approximately $9.7 million paid in the form of five-year promissory
notes accruing interest at an annual rate of 6% issued by the Buyer to the Company.
The Purchase Agreements contain negotiated representations, warranties,
covenants, and indemnification provisions by the parties which are believed to be customary for transactions of this type. The
Company simultaneously entered into franchise agreements with subsidiaries of the Buyer, pursuant to which the subsidiaries will
operate such branches as franchisees.
The California Purchase Agreement
On September 27, 2019, the Company closed on an Asset Purchase Agreement
(“California Purchase Agreement”) with Resolute Enterprises, LLC, a Florida limited liability company (“Resolute”),
for the sale of certain assets related to the operations of the Company’s branches in Corona, Hayward, Sacramento, and Fresno,
CA (collectively, the “California Assets”).
The aggregate purchase price for the California Assets consisted
of $1.8 million paid in the form of a four-year promissory note accruing interest at an annual rate of 10% issued by Resolute to
the Company. The promissory note is secured by the California Assets. In conjunction with the closing, and as agreed to by the
parties, the $150,000 Resolute had deposited in escrow as a breakup fee was returned to Resolute.
The California Purchase Agreement contained negotiated representations,
warranties, covenants, and indemnification provisions by the parties, which are believed to be customary for transactions of this type.