In a Burger King development agreement, what is the meaning of 'Incremental Opening Targets'?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
The Incremental Opening Targets set forth above are collectively referred to as the "Incremental Opening Targets" and individually, a "Incremental Opening Target". The Cumulative Opening Targets set forth above are collectively referred to as the "Cumulative Opening Targets" and individually, a "Cumulative Opening Target".
(b) Net of Closures Requirement. Developer acknowledges and agrees that all Cumulative Opening Targets must be achieved net of closures (as set forth in this Development Schedule and in Article III) so that such targets represent net restaurant growth (or NRG) in the Territory for each Development Year or portion thereof, as the case may be, and (ii) in the event of the closure of any Developer Restaurant in the Territory (including without limitation Developer Restaurants owned and operated by Developer and/or its Affiliates prior to the Commencement Date and Developer Restaurants not developed or opened pursuant to the Agreement), and without distinction as to the reason for such closure (i.e., expiration, early termination or otherwise), such Restaurant must be replaced by a new Franchised Restaurant by the end of the Development Year in which the closure occurred, as necessary, in order to achieve the Cumulative Opening Targets net of closures.
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, 'Incremental Opening Targets' refers to the specific number of new Burger King restaurants a developer is expected to open within a given development year, as outlined in the Development Schedule. These targets represent the minimum number of restaurants the developer must open to comply with the terms of their development agreement. The FDD also clarifies that exceeding these targets is possible, with restaurants opened beyond both the Incremental and Cumulative Opening Targets classified as "Excess Restaurants."
It's important to note that these targets are calculated net of closures. This means that if a Burger King restaurant closes within the territory, the developer must replace it with a new franchised restaurant within the same development year to still meet the Cumulative Opening Targets. This net-of-closures requirement ensures that the targets reflect actual restaurant growth in the territory.
Prospective Burger King developers should carefully review the Development Schedule within their agreement to understand the specific Incremental and Cumulative Opening Targets applicable to their territory. They should also consider the implications of the net-of-closures requirement and factor in potential closures when planning their development strategy. Understanding these targets is crucial for fulfilling the obligations of the development agreement and maintaining a positive relationship with Burger King.