Is there an exception to the 'same business' restriction for assignees of a Buns On Fire franchise?
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 Buns On Fire Franchise Disclosure Document, if a franchisee seeks to assign, transfer, or sell their franchise, the assignee, transferee, or purchaser is subject to specific conditions. Prior to the assignment, they must pay Buns On Fire a non-refundable transfer fee. This fee is equal to 50% of the then-current Initial Franchise Fee. This payment reimburses Buns On Fire for legal and accounting fees, credit investigation costs, training expenses, and other charges associated with the transfer.
Additionally, the assignee, transferee, or purchaser must enter into an agreement with Buns On Fire. This agreement ensures that their obligations to Buns On Fire, including Royalty Fees, Advertising Fees, and any installment payments of the purchase price owed to the franchisee, are subordinate to the franchisee's obligations.
These conditions ensure that Buns On Fire maintains control over who becomes a franchisee and that its financial interests are protected during the transfer process. The transfer fee compensates Buns On Fire for the costs associated with evaluating and training a new franchisee, while the subordination agreement safeguards the ongoing revenue stream for Buns On Fire.