What obligations of the assignee must be subordinated to Buns On Fire?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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, if a franchisee assigns their rights to a third party, that third party's obligations must be subordinated to Buns On Fire. This means that Buns On Fire's financial interests take precedence over the financial interests of the franchisee who is selling their franchise.
Specifically, the assignee's obligations to Buns On Fire that must be prioritized include any Royalty Fees, Advertising Fees, and any obligations the assignee has to make installment payments of the purchase price to the franchisee. In simpler terms, if the new franchisee owes money to both Buns On Fire and the previous franchisee, Buns On Fire gets paid first.
This subordination clause protects Buns On Fire's revenue stream and ensures that the franchisor continues to receive its fees even if the new franchisee is struggling financially or has payment obligations to the previous franchisee. For a prospective franchisee looking to sell their Buns On Fire location in the future, this condition could make it more difficult to find a buyer willing to agree to these terms, or it may reduce the sale price they can command.