When purchasing a Burger King franchise, what is the requirement regarding financing contingencies as a condition to the buyer's obligation to close the transaction?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
BUYER reserves the right to finance a portion of the Purchase Price, provided that there shall be no financing contingencies as a condition to BUYER'S obligation to close the transactions hereunder. All approvals, if any, that may be necessary from BUYER to close and consummate the transactions herein shall be timely obtained and delivered to BKC prior to Closing. At Closing, BUYER shall have sufficient and immediately available funds to pay the Purchase Price and all other amounts payable when due pursuant to this Agreement, the other agreements contemplated herein, and the transactions contemplated herein and thereby.
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 buyer chooses to finance a portion of the purchase price, they cannot make the closing of the transaction contingent upon securing that financing. This means the buyer must be prepared to close the deal regardless of whether their financing is approved.
This requirement places a significant responsibility on the buyer. They must ensure they have sufficient funds readily available to complete the purchase, regardless of any financing plans. This could involve having alternative funding sources or being prepared to pay the full purchase price without relying on external financing. Burger King requires that all necessary approvals from the buyer to close the transaction must be obtained and delivered to Burger King Company (BKC) before the closing date.
This policy likely aims to ensure a smooth and swift transaction process, preventing delays or cancellations due to financing issues. However, it also increases the risk for the buyer, who must be confident in their ability to secure financing or have alternative funds available. Prospective franchisees should carefully consider their financial situation and explore all financing options before committing to the purchase, understanding they cannot use financing as a contingency to avoid closing the deal.