Under what circumstances can Burger King immediately terminate the Development Agreement upon written notice to the Developer?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
ARTICLE VI: DEFAULT
- 6.1 Events of Default. Each of the following events shall constitute an "Event of Default" under this Agreement, which, unless otherwise specified, shall entitle BKC to immediately terminate this Agreement upon written notice to Developer:
- 6.1.1. Developer fails to achieve the Cumulative Opening Target for any Term Year by the end of such Term Year (each such failure, a "Development Default" and each such Term Year, a "Shortfall Development Year");
- 6.1.2 Developer (or any affiliate) fails at any time to satisfy the requirements for Franchise Approval;
- 6.1.3 Developer breaches or otherwise fails to timely comply with any provision of this Agreement, including, without limitation, allowing an A# to expire;
- 6.1.4 Developer, at any time after the Effective Date, either (i) ranks below the top 50% of U.S. franchisees in the same peer category as Developer, as such category is determined by BKC in BKC's sole discretion, in any metric used by BKC to measure operational performance, as measured by BKC, or (ii) receives a letter grade of "D" or "F" in any metric used by BKC to measure operational performance, as measured by BKC. For the avoidance of doubt, in determining any ranking, grade, rating or score of Developer pursuant to this paragraph, BKC may consider the performance not only of the BURGER KING® restaurants owned and operated by Developer, but also any BURGER KING® restaurants owned and operated by any affiliate(s) of Developer, or by any other franchisee owned in whole or in part by (x) any one or more of the owners of Developer, or (y) any "Managing Owner" or "Operating Partner" under any franchise agreement entered into by Developer or any affiliate of Developer;
- 6.1.5 Developer fails to cure any default within the time specified by BKC in any notice to Developer, under any franchise agreement, lease, or any other obligation owed to BKC; or
Source: Item 23 — RECEIPTS (FDD pages 127–995)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, there are several events that would allow Burger King to immediately terminate the Development Agreement with a developer upon written notice. These events are classified as 'Events of Default'.
Specifically, Burger King can terminate the agreement if the developer fails to achieve the Cumulative Opening Target for any Term Year by the end of that Term Year, which is considered a 'Development Default.' Termination can also occur if the developer (or any affiliate) fails to meet the requirements for Franchise Approval at any time. Furthermore, Burger King can terminate the agreement if the developer breaches or fails to comply with any provision of the Development Agreement, including allowing an A# to expire.
Additionally, Burger King can immediately terminate the agreement if the developer knowingly submits applications containing false or misleading statements or omits any material fact. These stipulations highlight the importance of meeting development targets, maintaining franchise approval standards, adhering to all agreement terms, and ensuring the accuracy of submitted information to avoid immediate termination of the Burger King Development Agreement.