If Buns On Fire assumes management of my Franchised Business, where will the funds be kept?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
failed to cure such breach although obligated to do so. Franchisee shall not delay or withhold the payment of all or any part of the fees for any reason, put the same in escrow or set-off same against any and all claims or alleged claims Franchisee may allege against Franchisor.
5.9 Set Off Option
Franchisor may set off against any money owed by Franchisor or Franchisor's Affiliate(s) to Franchisee or Franchisee's Affiliate(s) pursuant to this Agreement or otherwise. This right to set off will continue until Franchisee has paid, satisfied or discharged all monies, debts or liabilities due or owing to Franchisor and Franchisor's Affiliates. Franchisee hereby irrevocably authorizes Franchisor or Franchisor's Affiliate to deduct from any monies payable by Franchisor or Franchisor's Affiliate to Franchisee or Franchisee's Affiliate(s) pursuant to this Agreement or otherwise any monies due or owing to Franchisor or Franchisor's Affiliates by Franchisee or Franchisee's Affiliate from time to time.
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
According to the 2025 Buns On Fire Franchise Disclosure Document, if set-off is not possible in the franchisee's jurisdiction due to local laws, Buns On Fire or its affiliates will hold monies due to the franchisee or the franchisee's affiliate as a lien, free from interest. This arrangement will continue until the franchisee or their affiliate has paid all monies owed to Buns On Fire or its affiliates.
This means that if a franchisee owes money to Buns On Fire, and the franchisor also owes money to the franchisee, Buns On Fire can offset those amounts. However, if local laws prevent this set-off, the funds owed to the franchisee will be held as a lien without accruing interest until the franchisee's debts are settled.
For a prospective Buns On Fire franchisee, this condition highlights the importance of understanding the specific laws in their jurisdiction regarding set-off. It also emphasizes the need to maintain good financial standing with the franchisor to avoid having funds held as a lien. Franchisees should seek legal counsel to fully understand the implications of this clause in their specific location.