Does the Burger King franchise agreement allow for contingent transfer of ownership interest by agreement without BKC's prior written consent?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
If this Agreement has been assigned to a Corporation or LLC in accordance with Section 15 of this Agreement, then this right of first refusal shall also apply if Voting Common Stock in the Corporation, or Voting Units in the LLC, is sold, assigned or transferred to individuals or entities other than those approved by BKC as owners of the Voting Common Stock or Voting Units.
- B. The election by BKC not to exercise its right of first refusal as to any offer shall not affect its right of first refusal as to any subsequent offer.
- C. Any sale, attempted sale, assignment or other transfer of the franchise grant other than a transfer pursuant to Section 15.C or 15.D effected without first giving BKC the right of first refusal described above shall be void and of no force and effect. If this Agreement has been assigned to a Corporation or LLC in accordance with Section 15 of this Agreement, any sale, attempted sale, assignment or other transfer of Voting Common Stock in the Corporation or Voting Units in the LLC to individuals or entities other than those approved by BKC as owners of Voting Common Stock or Voting Units without first giving BKC the right of first refusal described above shall be void and of no force and effect.
Source: Item 23 — RECEIPTS (FDD pages 127–995)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, the franchise agreement requires written consent from BKC for the transfer of ownership interests. Specifically, if the franchise agreement has been assigned to a corporation or LLC, the right of first refusal applies if voting common stock in the corporation, or voting units in the LLC, are sold, assigned, or transferred to individuals or entities other than those approved by BKC as owners of the voting common stock or voting units. This means that any transfer of ownership, whether it's the entire franchise or just shares in a corporate entity that holds the franchise, needs Burger King's approval.
Burger King retains a right of first refusal, meaning that if a franchisee receives an offer from a third party to purchase the franchised restaurant or any interest in it, the franchisee must first offer Burger King the opportunity to purchase the interests on the same terms. This right extends not only to the sale of the restaurant itself but also to the transfer of voting stock or units in a corporation or LLC that operates the franchise. Burger King has a specified period to decide whether to exercise this right, and failure to obtain this approval renders the sale void.
This requirement protects Burger King's interests by allowing them to control who becomes a franchisee and ensures that new owners meet their standards. It also allows Burger King to maintain consistency and quality across all its franchise locations. For a prospective franchisee, this means they cannot freely sell or transfer their franchise or ownership stake without Burger King's prior approval, which may impact their exit strategy or succession planning.