Can a Buns On Fire franchisee offset royalty fees with gift card redemptions?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
If implemented by Franchisor, Franchisee shall sell or otherwise issue gift cards or certificates (together "Gift Cards") that have been prepared utilizing the standard form of Gift Card provided or designated by Franchisor, and only in the manner specified by Franchisor in the Confidential Operations Manual or otherwise in writing. Franchisee shall fully honor all Gift Cards that are in the form provided or approved by Franchisor regardless of whether a Gift Card was issued by Franchisee or another franchise in the System. Franchisee shall sell, issue, and redeem (without any offset against any Royalty Fees) Gift Cards in accordance with procedures and policies specified by Franchisor in the Confidential Operations Manual or otherwise in writing, including those relating to procedures by which Franchisee shall request reimbursement for Gift Cards issued by other franchises and for making timely payment to Franchisor, other operators of franchises, or a third-party service provider for Gift Cards issued from the Franchised Business that are honored by Franchisor or other franchise operators.
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
According to the 2025 Buns On Fire Franchise Disclosure Document, franchisees cannot offset royalty fees with gift card redemptions. The FDD states that franchisees must redeem gift cards without any reduction or offset against royalty fees.
Buns On Fire requires franchisees to sell and honor gift cards according to the procedures outlined in the Confidential Operations Manual or other written guidelines. These procedures also cover how franchisees request reimbursement for gift cards that were initially issued by other Buns On Fire locations within the system.
Furthermore, franchisees are responsible for making timely payments to Buns On Fire, other franchise operators, or any third-party service providers for gift cards that were originally issued from their franchise but honored by either Buns On Fire itself or other franchisees within the system. This ensures that all gift card transactions are properly accounted for and settled within the Buns On Fire franchise network.