What is the dependency between the assignment of a Buns On Fire franchise and the payment of debts?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
- (viii.) Assignee, transferee, or purchaser shall, prior to any such assignment, pay to Franchisor a non-refundable transfer fee equal to fifty percent (50%) of the then-current Initial Franchise Fee to reimburse Franchisor for its legal and accounting fees, credit investigation, training expenses, and other charges and expenses in connection with such assignment, transfer or sale; and
- (ix.) Franchisee shall enter into an agreement with the Franchisor agreeing to subordinate such assignee's, transferee's or purchaser's obligations to the Franchisor, including, without limitation, any Royalty Fees and Advertising Fees, and any obligations of such assignee, transferee or purchaser to make installment payments of the purchase price to Franchisee.
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
According to the 2025 Buns On Fire Franchise Disclosure Document, the assignment, transfer, or purchase of a Buns On Fire franchise is contingent upon the assignee, transferee, or purchaser paying the franchisor a non-refundable transfer fee. This fee is equal to fifty percent (50%) of the then-current Initial Franchise Fee. This fee is intended to reimburse Buns On Fire for costs associated with the transfer, such as legal and accounting fees, credit investigation, training expenses, and other related charges.
Furthermore, the franchisee is required to enter into an agreement with Buns On Fire. This agreement ensures that the obligations of the assignee, transferee, or purchaser to the franchisor are subordinate to the franchisee's obligations. This subordination includes, but is not limited to, Royalty Fees, Advertising Fees, and any installment payments owed by the assignee, transferee, or purchaser to the franchisee for the purchase price of the franchise.
In simpler terms, before a Buns On Fire franchise can be transferred to a new owner, the new owner must pay a transfer fee to Buns On Fire, and the franchisee must agree that the new owner's financial obligations to Buns On Fire (like royalties and ad fees) take precedence over any payments the new owner owes the franchisee for buying the franchise. This protects Buns On Fire's financial interests during the transfer process.