Under what circumstances can Burger King immediately terminate the franchise agreement upon written notice to the developer?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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 written notice to the developer. These include failing to meet the Cumulative Opening Target for any Term Year by the end of that Term Year, failing to satisfy the requirements for Franchise Approval at any time, and breaching or failing to comply with any provision of the Development Agreement, such as allowing an A# to expire.
Additionally, Burger King can immediately terminate the agreement if the developer ranks below the top 50% of U.S. franchisees in their peer category or receives a letter grade of "D" or "F" in any metric used by Burger King to measure operational performance. Burger King also has the right to terminate the agreement immediately if the developer fails to cure any default within the specified time frame under any franchise agreement, lease, or other obligation owed to Burger King.
These termination rights highlight the importance of meeting development targets, maintaining franchise approval, and adhering to operational standards. For a prospective Burger King developer, it is crucial to understand these conditions and ensure they have the resources and capabilities to meet these requirements to avoid potential termination of the Development Agreement. The performance metrics and peer comparisons also suggest that Burger King closely monitors franchisee performance and uses it as a basis for enforcing the agreement.