Under what condition is a Buns On Fire franchisee allowed to not pay royalty fees?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding anything to the contrary in the Franchise Agreement, if you are a resident of the State of North Dakota and/or purchasing a franchise for a Buns on Fire Restaurant located in the State of North Dakota, then you need not pay the Initial Franchise Fee or any of the other initial fees or payments to us until your Buns on Fire Restaurant commences doing business, by which time we will have fulfilled our initial obligations to you under the Franchise Agreement and related agreements.
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
According to the 2025 Buns On Fire Franchise Disclosure Document, a franchisee is not required to pay the initial franchise fee or other initial fees until the Buns On Fire restaurant commences business if they are a resident of North Dakota or purchasing a franchise for a location in North Dakota. This deferral is contingent upon Buns On Fire fulfilling their initial obligations under the Franchise Agreement and related agreements.
This deferral of fees provides a financial benefit to franchisees in North Dakota, as it allows them to delay payment until the business is operational and generating revenue. This can be particularly helpful in managing initial startup costs and cash flow. It also ensures that Buns On Fire is incentivized to fulfill their pre-opening obligations promptly.
It's important to note that this exception applies specifically to franchisees in North Dakota. Franchisees in other states are generally required to pay the initial franchise fee upfront, regardless of when the business commences operations. This addendum reflects specific legal and regulatory considerations within North Dakota that impact the franchise agreement.