Under what conditions is the Burger King agreement automatically terminated?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
on is the result of governmental exercise of eminent domain, Franchisee may, with BKC's consent and subject to availability, relocate to other premises in the same market area for the balance of the Term of this Agreement.
- (11) Franchisee files a petition or application seeking any type of relief under the Bankruptcy Code or any state insolvency or similar law, or someone files a petition or application seeking to have Franchisee adjudicated a bankrupt, or seeking other relief against Franchisee under the Bankruptcy Code or any state insolvency or similar law and the petitioner application is not dismissed within ninety (90) days after it is filed. Subject to the applicable law, this Agreement shall terminate without notice or cure period upon the occurrence of this act of default as if that date were the Expiration Date and Franchisee expressly and knowingly waives any rights that it may have under the provisions of the Bankruptcy Code and consents to the termination of this Agreement or any other relief which may be sought in a Complaint filed by BKC to lift the provisions of the automatic stay of the Bankruptcy Code. Additionally, Franchisee agrees not to seek an Injunctive Order from any court in any jurisdiction relating to insolvency, reorganization or arrangement proceedings which would have the effect of staying or enjoining this provision.
- (12) Franchisee admits in writing its inability to pay its debts as they mature or makes an assignment for the benefit of creditors, or a receiver (permanent or temporary) for any part of its property is appointed by a court of competent authority. If this act of default shall occur, BKC shall have the right to immediately terminate this Agreement without notice or cure period.
- (13) A final judgment against Franchisee (including a final judgment in favor of BKC or any Affiliate of BKC) remains unsatisfied of record for thirty (30) days (unless a supersedeas or other appeal bond has been filed), or if a levy of execution is made upon the franchise granted by this Agreement or upon any property used in the Franchised Restaurant, and said levy it is not discharged within five (5) days of said levying.
- (14) Conviction of either Franchisee or the Managing Owner in a court of competent jurisdiction of (i) an indictable offense punishable by a term of imprisonment in excess of one (1) year, (ii) any offense, regardless of how punishable, for which a material element is fraud, dishonesty or moral turpitude, or (iii) any other crime or offense arising from or related to the operation of the Franchised Restaurant, other franchised BURGER KING Restaurants, the BURGER KING Restaurant business of the Franchisee or any other business of the Franchisee or Managing Owner that BKC believes is reasonably likely to have an adverse effect on the BURGER KING System, the BURGER KING Marks, or the good will associated therewith in the geographical area where the Franchised Restaurant is located.
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 conditions that can lead to the termination of the franchise agreement. One such condition is if a final judgment against the franchisee remains unsatisfied for thirty days, unless an appeal bond has been filed. Additionally, if a levy of execution is made upon the franchise or any property used in the restaurant and it is not discharged within five days, this can also result in termination. These stipulations ensure that franchisees meet their financial obligations and legal responsibilities.
Another condition that can lead to termination without an opportunity to cure involves criminal convictions. If the franchisee, the Operating Partner, or, if the agreement is assigned to a corporation or LLC, the corporation or LLC, or an officer, director, shareholder, or member of the Corporation or LLC, is convicted of (i) an indictable offense punishable by a term of imprisonment in excess of one year, (ii) any offense involving fraud, dishonesty, or moral turpitude, or (iii) any crime related to the Burger King restaurant, other franchised Burger King restaurants, or any other business that Burger King believes is reasonably likely to have an adverse effect on the Burger King system, the Burger King Marks, or the good will associated therewith in the geographical area where the Franchised Restaurant is located, Burger King has the right to terminate the agreement effective immediately upon notice.
Further, Burger King can terminate the agreement immediately if the franchisee uses or duplicates the Burger King system, engages in unfair competition, or discloses trade secrets. Similarly, denying Burger King the right to inspect the restaurant or audit sales and accounting records also results in immediate termination. These terms protect Burger King's brand, operational methods, and proprietary information.
Finally, if the franchisee fails to meet the minimum financial criteria set forth in Burger King's North America Financial Policy, Burger King can terminate the agreement if the franchisee does not cure the default within one hundred eighty days after notice. Also, failure to comply with requirements related to the Operating Partner can result in termination. These conditions underscore the importance of maintaining financial stability and adhering to operational standards to avoid termination of the Burger King franchise agreement.