If a Burger King franchisee transfers their interest in Participating Restaurants or Un-Owned Restaurants, what condition must they fulfill regarding the purchaser's obligation for the franchisee's additional contribution?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event FRANCHISEE transfers FRANCHISEE's interest in any of the Participating Restaurants (as set forth in Appendix A) and Un-Owned Restaurants (as defined in Paragraph 10 below and set forth in Appendix A), FRANCHISEE shall remain personally liable for any FRANCHISEE's Additional Contribution promised pursuant to this Agreement (in accordance with the Assignment and Transfer provisions of the relevant Franchise Agreement(s)) and as a condition to any such transfer shall require the purchaser(s) of any of the Participating Restaurants and Un-Owned Restaurants be or become jointly and severally obligated for FRANCHISEE's Additional Contribution.
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, if a franchisee transfers their interest in Participating Restaurants or Un-Owned Restaurants, they remain personally liable for their Additional Contribution. As a condition of the transfer, the franchisee must ensure that the purchaser becomes jointly and severally obligated for the franchisee's Additional Contribution.
This means that even after selling the restaurants, the original franchisee is still on the hook for any unpaid Additional Contribution. To protect themselves, they must make sure the buyer legally commits to covering this contribution as well. This requirement is in accordance with the Assignment and Transfer provisions outlined in the relevant Franchise Agreement(s).
This condition aims to ensure that Burger King continues to receive the Additional Contribution, regardless of changes in ownership. Prospective franchisees should carefully consider this obligation and its implications for future sales or transfers of their Burger King restaurants. It is important to fully understand the terms of the Assignment and Transfer provisions within the Franchise Agreement to navigate this process smoothly.