What options does Buns On Fire give the assignee regarding assuming the Franchisee's obligations?
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 FDD, Buns On Fire outlines specific obligations for an assignee, transferee, or purchaser assuming a franchisee's responsibilities. Prior to the assignment, the assignee must pay Buns On Fire a non-refundable transfer fee equal to 50% of the then-current Initial Franchise Fee. This fee reimburses Buns On Fire for costs related to legal and accounting work, credit checks, training, and other expenses associated with the transfer.
Additionally, the franchisee must enter into an agreement with Buns On Fire to ensure the assignee's obligations are subordinate to Buns On Fire's interests. This subordination includes, but isn't limited to, Royalty Fees, Advertising Fees, and any installment payments the assignee owes the franchisee for the purchase of the business.
These stipulations ensure that Buns On Fire maintains financial and operational control over its franchises even when ownership changes. The transfer fee compensates Buns On Fire for the administrative and training costs associated with bringing in a new franchisee, while the subordination agreement protects Buns On Fire's revenue streams and interests above those of the outgoing franchisee.