Under what conditions can a Burger King franchisee transfer their Program Agreement?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
6. ASSIGNMENT/TRANSFER: CONDITIONS AND LIMITATIONS. The following paragraphs replace Section 15 of the Agreement:
A. Transfer by Franchisee
- (1) Except with the prior written consent of an authorized officer of BKC as provided in Section 15.F below, Franchisee shall not (a) directly or indirectly sell, assign, convey, give away, or otherwise transfer its rights or obligations under this Agreement, or delegate any of its duties hereunder, (b) sell, assign, transfer, convey or give away substantially all of the assets of the Franchised Restaurant, or (c) sell, assign, transfer, convey or give away or otherwise grant or deliver any additional equity interests in the Franchisee.
- (2) No holder of shares of stock or other equity interests in the Franchisee, in any Owner or in any Managing Owner shall directly or indirectly sell, assign, convey, give away, mortgage, pledge, hypothecate, or otherwise transfer or encumber any legal or beneficial interest in such stock or equity interest without the prior written consent of BKC.
- (3) Except as provided in Section 15.D below, Franchisee shall not directly or indirectly mortgage, pledge, hypothecate, give as collateral for an obligation, or otherwise encumber its rights or obligations under this Agreement.
B. Notice of Proposed Transfer
- (6) The Franchisee (and, if applicable, each Owner) must execute a general release, in a form acceptable to BKC, of any and all claims against BKC, its Affiliates, and their respective officers, directors, agents, and employees;
- (7) The transferee, its Managing Owner, its Managing Director, and its Restaurant Manager must complete, at the transferee's expense, any applicable orientation and training programs required by BKC at the time of transfer;
- (8) The transferor must pay the Transfer Fee set forth on the Key Contract Data page in consideration of BKC's expenses in reviewing the proposed transfer (the "Transfer Fee"). In the event the prospective transferee is not an existing approved BURGER KING franchisee, Franchisee as transferor shall pay BKC a New Franchisee Training Fee in the amount set forth as the New Franchisee Training Fee on the Key Contract Data page in connection with the transfer of the first BURGER KING Restaurant involved in the transaction (the "New Franchisee Training Fee");
- (9) BKC shall approve the terms and conditions of the sale which affect the sufficiency of cash flow from the business after payment of debt service necessary for reinvestment in the business for refurnishing, maintaining, and remodeling the Franchised Restaurant;
- (10) The transferee must meet with representatives of BKC in Miami, Florida, U.S.A., or such other location as may be designated by BKC; and
- (11) The articles of incorporation, the bylaws and each stock certificate of the new franchisee, if applicable must at all times provide that the issuance and transfer of shares in the new franchisee are restricted as provided above and may be done only in accordance with the terms and conditions of this Agreement.
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, a franchisee faces several conditions and limitations when transferring their franchise agreement. Burger King requires prior written consent from an authorized officer for any direct or indirect sale, assignment, or transfer of rights and obligations under the agreement. This also applies to selling or transferring substantially all assets of the franchised restaurant or granting additional equity interests in the franchise. Even the transfer of stock or equity interests in the franchisee, owner, or managing owner requires prior written consent from Burger King.
Before a transfer can occur, Burger King requires notification of the proposed transfer. The franchisee must also ensure several conditions are met. The franchisee (and each owner, if applicable) must execute a general release of claims against Burger King and its affiliates. The transferee, along with their managing owner, managing director, and restaurant manager, must complete any required orientation and training programs at their own expense. The transferor must pay a transfer fee to cover Burger King's expenses for reviewing the proposed transfer. If the transferee is not an existing approved Burger King franchisee, the transferor must also pay a new franchisee training fee.
Burger King also maintains control over the financial aspects of the transfer, requiring approval of the sale terms and conditions to ensure sufficient cash flow for reinvestment in the business, including refurbishment and remodeling. The transferee must meet with Burger King representatives in Miami, Florida, or another designated location. Additionally, the articles of incorporation, bylaws, and stock certificates of the new franchisee must restrict the issuance and transfer of shares, aligning with the terms of the agreement. These stipulations ensure that Burger King maintains standards and financial viability across its franchise network, while also protecting its interests during ownership changes.