What compliance requirements must a Burros Fries franchisee meet to be eligible to transfer their franchise?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
ny purpose any trade name, trade or service mark or other commercial symbol that suggest or indicates a connection or association with us as described in Sections 24.A and 24.C of this Agreement.
In addition, the Franchisee must submit copies of the draft Asset Purchase Agreement or Ownership Purchase Agreement, all draft Promissory Notes, and Security Agreements, with the transferee, regardless of whether they are Franchisee financed or lender financed. In addition to all other grounds for rejection, we have the right to reject any proposed purchase of the assets of the Franchised Business or any type of ownership interest in the Franchisee or Franchised Business on the grounds that the proposed transferee has, in our sole opinion, taken on too much debt.
C. Transfer, Sale or Assignment by Franchisor and Franchisor's Right of First Refusal
Franchisee acknowledges that we have an unrestricted right to sell, transfer or assign its rights or obligations under this Agreement to any transferee or legal successor of ours.
We have a right of first refusal regarding any proposed sale, assignment or transfer by Franchisee subject to this Agreement. During the term of this Agreement, if Franchisee, any of its Owners wish to sell, assign or otherwise transfer an interest in this Agreement, the Franchised Business and/or its assets, or an ownership interest in Franchisee (collectively, the "Interest"), then Franchisee will comply with the requirements of Sections 22.B, 22.C and 22.E of this Agreement.
Franchisee will notify us within ten (10) days after Franchisee has commenced discussions or communications even if preliminary, regarding such a proposed sale, assignment or transfer and then send us written updates of the status of such discussions or communications every thirty (30) days thereafter unless and until such discussions or communications have ceased, in which case Franchisee must notify us in writing within five (5) business days that such discussions or communications have ceased.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, a Burros Fries franchisee needs to meet several compliance requirements to be eligible to transfer their franchise. The franchisee must submit copies of the draft Asset Purchase Agreement or Ownership Purchase Agreement, along with all draft Promissory Notes and Security Agreements, with the transferee, regardless of whether they are franchisee financed or lender financed. Burros Fries retains the right to reject any proposed purchase if, in their opinion, the proposed transferee has taken on too much debt.
Additionally, after the transfer, the franchisee, its owners, and principals must agree not to compete with Burros Fries, divert business, or attempt to hire employees, adhering to restrictions similar to those outlined in Section 19.C of the Franchise Agreement. They also cannot identify themselves as current or former Burros Fries business owners or franchise owners, or use any marks or indicia associated with Burros Fries, except concerning other Burros Fries businesses they may own and operate.
Burros Fries also has the right to discuss the transfer with any proposed transferee and may contact them directly. However, neither the franchisee nor the transferee should rely on Burros Fries to assist in evaluating the terms of the proposed transfer, and approval of the transfer does not indicate any likelihood of success or economic viability for the new owner. These stipulations ensure that Burros Fries maintains control over its brand and operations, even when a franchise changes ownership.