What constitutes a default under a Burger King loan for the Crown Your Career Program?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
Promissory Note is immediately due to us (Promissory Note – Section 21). We can assign the loan and our interest in any collateral.
You will be in default under your loan if you fail to make payments in a timely manner or fail to maintain any ACH or automatic repayment methods we require; any default occurs under your Franchise Agreement, Security Agreement or Promissory Note, Fuel the Flame Co-Investment Agreement, or real estate lease or sublease with us or our affiliate, or under any other agreement between you (or your affiliate) and us; if you or your guarantor becomes insolvent, files a petition in bankruptcy, makes an assignment for the benefit of creditors or admits inability to pay debts as they become due; if you sell or divest, or any material damage, loss, or theft occurs related to, any portion of the collateral securing the loan (beyond the sale of inventory in the ordinary course of business) or any lien in the collateral ceases to be perfected; if any event or change in your financial condition occurs which results in or could reasonably be expected to
have a material adverse effect; or if you made any materially false representation or warranty to us under the loan.
If you default, we may, at our election, accelerate and require that you immediately pay all accrued and unpaid amounts outstanding (Security Agreement – Section 6 and Promissory Note – Section 5). We can also take possession of the collateral, sell it and apply the proceeds against what you owe us after deducting any costs we incur. A default under this loan will be deemed a default under the Franchise Agreement, which may be grounds for termination of your franchise (subject to state law) (Promissory Note – Section 20). You must also pay our costs and expenses, including reasonable attorneys' fees and collection costs, to enforce the Security Agreement and Promissory Note (Security Agreement – Section 1 and Promissory Note – Section 17).
Source: Item 10 — FINANCING (FDD pages 60–62)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, several conditions can trigger a default under the Crown Your Career Program loan. These include failing to make timely payments or maintain required ACH or automatic repayment methods. A default also occurs if there is a default under the Franchise Agreement, Security Agreement, Promissory Note, Fuel the Flame Co-Investment Agreement, or any real estate lease or sublease with Burger King or its affiliates, or any other agreement between the franchisee (or their affiliate) and Burger King.
Further, a default is triggered if the franchisee or their guarantor becomes insolvent, files for bankruptcy, makes an assignment for the benefit of creditors, or admits an inability to pay debts as they become due. Selling or divesting any interest in the franchisee (if an entity), the Burger King Restaurant(s), or the Franchise Agreement also constitutes a default, making the outstanding balance and accrued interest immediately due. Material damage, loss, or theft related to any portion of the collateral securing the loan (beyond the sale of inventory in the ordinary course of business) or any lien in the collateral ceasing to be perfected are also default triggers.
Finally, a default occurs if any event or change in the franchisee's financial condition results in or could reasonably be expected to have a material adverse effect, or if the franchisee made any materially false representation or warranty to Burger King under the loan. If a franchisee defaults, Burger King can accelerate the loan and demand immediate payment of all outstanding amounts. Burger King can also take possession of the collateral, sell it, and apply the proceeds to the debt after deducting any costs incurred. A default under the loan is considered a default under the Franchise Agreement, potentially leading to termination of the franchise, subject to state law. The franchisee is also responsible for Burger King's costs and expenses, including reasonable attorneys' fees and collection costs, to enforce the Security Agreement and Promissory Note.