When a franchisee transfers their interest in a Burger King restaurant, what agreement must the transferee enter into as a condition of the transfer?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
(c) If Franchisee desires to transfer Franchisee's interest in any Participating Restaurant during the Term, Franchisee acknowledges and agrees that a condition to any such transfer shall be the party or parties acquiring such interest in the Participating Restaurant (collectively, the "Transferee") agreeing to participate in the Ad Fund FTF Program with respect to such Participating Restaurant. In furtherance of the foregoing, the Transferee shall enter into a Co-Investment Agreement in the form of this Agreement with respect to each Participating Restaurant being acquired by the Transferee concurrently with the execution by Transferee of the Franchise Agreement for such Participating Restaurant. Franchisee agrees that BKC may withhold its consent to any transfer of Franchisee's interest in any Participating Restaurant if the proposed Transferee does not enter into a Co-Investment Agreement in the form of this Agreement with respect to each Participating Restaurant acquired by the Transferee.
(5) That the transferee, at BKC's election, consistent with then-current BKC policy, (a) enters into a written assignment, in a form satisfactory to BKC, assuming and agreeing to discharge all of Franchisee's obligations under this Agreement, or (b) executes, for a term ending on the Expiration Date of this Agreement, BKC's then-current form of BURGER KING Restaurant franchise agreement applicable to such transferee and such other ancillary agreements as BKC may require for the Franchised Restaurant; provided, however, that the royalty and advertising contribution rates shall be the same as stated herein until such Expiration Date.
If the transferee is required to execute a new franchise agreement, such agreement shall supersede this Agreement in all respects;
(6) That the transferee (or, if applicable, such owners of the transferee as BKC may request) meets all of the BKC requirements then applicable to ownership of franchises and executes a guarantee of the performance of Franchisee's obligations to BKC and BKC's Affiliates.
(7) That the Franchisee and each transferor execute a general release, in a form satisfactory to BKC, of any and all claims against BKC, its Affiliates, and their respective officers, directors, agents, and employees, in their corporate and individual capacities;
(8) Approval by BKC of the terms of the contract of sale which impact the sufficiency of cash flow from the business after payment of debt service to provide for, among other things, any needed repairs to or remodeling of the Franchised Restaurant; and
(9) That the transferor pay the Transferor Transfer Fee set forth on the Key Contract Data page in consideration of BKC's expenses in reviewing the proposed transfer (the "Transferor Transfer Fee").
In the event the transferee is not an existing approved BURGER KING franchisee, Franchisee seller shall pay BKC a New Franchisee Training Fee in the amount set forth as the New
Source: Item 23 — RECEIPTS (FDD pages 127–995)
What This Means (2025 FDD)
According to the 2025 Burger King Franchise Disclosure Document, if a franchisee wishes to transfer their interest in a Burger King restaurant during the term of the agreement, the party acquiring the interest (the transferee) must agree to participate in the Ad Fund FTF Program for that restaurant. To formalize this, the transferee must enter into a Co-Investment Agreement, which is in the same form as the original agreement, concurrently with the execution of the Franchise Agreement for the restaurant they are acquiring. Burger King can withhold consent to the transfer if the transferee does not agree to enter into this Co-Investment Agreement.
Additionally, Burger King, at its election, may require the transferee to enter into a written assignment, in a form satisfactory to Burger King, assuming and agreeing to discharge all of the franchisee's obligations under the original agreement. Alternatively, Burger King may require the transferee to execute Burger King's then-current form of Burger King Restaurant franchise agreement applicable to such transferee and such other ancillary agreements as Burger King may require for the Franchised Restaurant, for a term ending on the Expiration Date of the original agreement. The royalty and advertising contribution rates will remain the same as stated in the original agreement until such Expiration Date. If the transferee is required to execute a new franchise agreement, that agreement will supersede the original agreement in all respects.
The transferee (or owners of the transferee, as Burger King may request) must also meet all of Burger King's requirements applicable to franchise ownership and execute a guarantee of the performance of the franchisee's obligations to Burger King and its affiliates. The franchisee and each transferor must execute a general release, in a form satisfactory to Burger King, of any and all claims against Burger King, its affiliates, and their respective officers, directors, agents, and employees, in their corporate and individual capacities. Burger King must also approve the terms of the contract of sale which impact the sufficiency of cash flow from the business after payment of debt service to provide for, among other things, any needed repairs to or remodeling of the Franchised Restaurant. The transferor must pay the Transferor Transfer Fee set forth on the Key Contract Data page in consideration of Burger King's expenses in reviewing the proposed transfer. If the transferee is not an existing approved Burger King franchisee, the franchisee seller must pay Burger King a New Franchisee Training Fee in the amount set forth as the New Franchisee Training Fee on the Key Contract Data page.
These requirements ensure that the new owner is fully committed to the Burger King system, financially stable, and releases Burger King from any potential liabilities related to the transfer. This is a fairly standard practice in franchising, as franchisors want to maintain consistency and protect their brand standards when a franchise changes hands. Prospective franchisees should carefully review these requirements and ensure they are prepared to meet them before attempting to transfer a Burger King franchise.