What actions are Burger King franchisees prohibited from taking, directly or indirectly, to avoid the ownership and authority requirements for the Managing Owner?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees that it has not and will not hereafter, directly or indirectly, avoid the financial interest requirements and the direct operation requirements set forth above and in Section 3 below through entry into a management agreement, consulting agreement or any other such artificial device or arrangement with persons or entities other than the Managing Director (defined below).
Franchisee agrees to furnish BKC with such evidence as BKC may request from time to time for the purpose of assuring BKC that Franchisee's efforts and equity interest remain as represented in this Agreement.
Franchisee has not taken and agrees that it will not hereafter take, whether directly or indirectly, any action to avoid the authority requirement for the Managing Director through the entry of limiting entity resolutions, management agreements, amendments of governing documents or any other device or arrangement.
Franchisee agrees to furnish BKC with such evidence as BKC may request from time to time for the purpose of assuring BKC that the Managing Director's authority remains as represented in this Agreement and to require that the Managing Director attend the Continuing Operations Training.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 109–124)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, franchisees must maintain both financial interest and direct operational control of their restaurants. To ensure this, Burger King prohibits franchisees from taking actions, directly or indirectly, to circumvent these requirements.
Specifically, franchisees cannot use management agreements, consulting agreements, or any other artificial arrangements with other persons or entities (besides the approved Managing Director) to avoid these financial and operational responsibilities. Burger King retains the right to request evidence from franchisees to ensure they are meeting their equity and operational obligations as outlined in the agreement.
Furthermore, franchisees must not take any action to undermine the authority of the Managing Director. This includes avoiding the authority requirement through limiting entity resolutions, management agreements, amendments of governing documents, or any other similar device or arrangement. Burger King can request evidence to confirm the Managing Director's authority remains as represented in the agreement, and the Managing Director must attend continuing operations training.