Is a Buns On Fire franchisee allowed to transfer their franchise rights to another party?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee is an individual, Franchisor hereby consents, upon thirty (30) days' prior written notice, to the assignment by Franchisee of all of the Franchisee's rights and benefits under this Agreement to a corporation or limited liability company of which Franchisee owns at least a majority of the voting and equity stock or membership interests, provided that:
- (i.) Such entity is newly organized, and its activities and corporate purposes are confined exclusively to acting as a Buns on Fire franchise under this Agreement;
- (ii.) Such entity and all stockholders or members thereof execute a Transfer of Franchise to a Corporation or Limited Liability Company form, or such other form as shall be provided or approved by Franchisor, in which they jointly and severally assume all of the past and future obligations of Franchisee under this Agreement, to the same extent as if they had originally executed this Agreement as Franchisee;
- (iii.) Franchisee or Franchisee's designated manager actively manages such entity and continues to devote his/her best efforts and full and exclusive time to the day-to-day operation and development of the franchise and the business of the Franchised Business and Franchisee shall remain personally liable in all respects under this Agreement, including but not limited to payment for the purchase of any of the Products, jointly and severally with such entity and any and all other stockholders or members thereof; and
- (iv.) All certificates of such entity bear the following legend, which shall be printed legibly and conspicuously on the front of each such certificate:
"The transfer of this certificate is subject to the terms and conditions of a certain Franchise Agreement entered into with SMYA Ventures LLC, dated , 20 ".
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
According to the 2025 Buns On Fire Franchise Disclosure Document, franchisees are permitted to transfer their franchise rights under certain conditions. Specifically, if the franchisee is an individual, they can transfer their rights to a corporation or limited liability company if they own at least a majority of the voting and equity stock or membership interests. This entity must be newly organized and exclusively focused on operating the Buns On Fire franchise.
To complete the transfer, the entity and all its stockholders or members must execute a Transfer of Franchise form, assuming all past and future obligations of the franchisee. The franchisee or their designated manager must actively manage the entity and devote their full time and effort to the franchise's operation. Importantly, the franchisee remains personally liable under the Franchise Agreement, jointly and severally with the entity and its stockholders or members. Additionally, all certificates of the entity must bear a specific legend indicating the transfer is subject to the terms of the Franchise Agreement with SMYA Ventures LLC.
Furthermore, the FDD stipulates that any assignee, transferee, or purchaser must pay Buns On Fire a non-refundable transfer fee equal to 50% of the then-current Initial Franchise Fee. This fee is intended to cover the franchisor's costs related to the transfer, including legal and accounting fees, credit investigation, and training expenses. The franchisee must also enter into an agreement subordinating the assignee's obligations to Buns On Fire, including royalty and advertising fees, and any installment payments of the purchase price owed to the franchisee.
In the state of Washington, transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer. Prospective franchisees should carefully review these conditions and associated costs to fully understand the requirements and financial implications of transferring their Buns On Fire franchise.