Under what conditions is the Buns On Fire franchisor not indemnified by the franchisee?
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)
According to the 2025 Buns On Fire Franchise Disclosure Document, a franchisee must promptly notify Buns On Fire when they receive an offer to buy their franchise. "Promptly" is defined as within 15 days of receiving the offer. The franchisee must also notify Buns On Fire simultaneously with any offer to sell the franchised business. This notification enables Buns On Fire to comply with state and federal franchise disclosure laws. The franchisee agrees to indemnify and hold Buns On Fire harmless if they fail to comply with these notification requirements.
In practical terms, this means that if a Buns On Fire franchisee fails to provide timely or simultaneous notice to Buns On Fire regarding an offer to buy their franchise, and this failure results in legal or financial repercussions for Buns On Fire, the franchisee is responsible for covering Buns On Fire's losses. This could include legal fees, fines, or other damages.
This requirement is fairly standard in franchising, as franchisors need to maintain control over their brand and ensure compliance with franchise laws. By requiring franchisees to provide notice of potential sales, Buns On Fire can ensure that any transfer of the franchise is done legally and in a way that protects the brand's interests. Franchisees should be aware of this obligation and ensure they have procedures in place to comply with the notification requirements to avoid potential liability.