Does Buns On Fire have the right to defend claims arising from a franchisee's securities offering?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to the requirements of this Article, Franchisee must promptly ("promptly" being herein defined as within fifteen (15) days of receipt of an offer to buy) give Franchisor additional written notice whenever Franchisee has received a bona fide offer from a third party to buy Franchisee's business franchised hereunder. Franchisee must also give Franchisor written notice simultaneously with any offer to sell the Franchised Business made by, for, or on behalf of Franchisee. The purpose of this Subsection is to enable Franchisor to comply with any applicable state or federal franchise disclosure law or rules. Franchisee agrees to indemnify and hold Franchisor harmless for Franchisee's failure to comply with this Subsection.
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, it is not clear whether Buns On Fire has the right to defend claims arising from a franchisee's securities offering. The document includes information on indemnification by the franchisor under certain circumstances, specifically related to trademark infringement claims. However, it does not explicitly address the franchisor's rights or obligations regarding claims arising from a franchisee's securities offering. The FDD provides information regarding the franchisee's responsibility to provide notice to the franchisor when receiving an offer to buy the franchise, and the franchisee's agreement to indemnify and hold the franchisor harmless for failure to comply with this notification requirement. This suggests that the franchisor is concerned with compliance with franchise disclosure laws. The FDD also includes addenda for specific states like North Dakota and Washington, which modify certain terms of the franchise agreement to comply with state laws. These addenda do not mention securities offerings. A prospective franchisee should seek clarification from Buns On Fire regarding their rights and responsibilities related to claims arising from securities offerings. Specifically, they should ask whether the franchisor has the right to defend such claims, and what support or resources the franchisor would provide in such a situation.