What details must be included in the offer relating to the proposed sale of a Burros Fries franchise?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, a franchisee looking to sell their franchise must submit copies of the draft Asset Purchase Agreement or Ownership Purchase Agreement with the transferee, regardless of whether they are franchisee financed or lender financed. This means that Burros Fries requires full transparency into the financial and legal terms of the proposed sale.
Burros Fries retains 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 their sole opinion, taken on too much debt. This clause protects the Burros Fries brand by ensuring that new owners are financially stable and capable of running the franchise successfully.
This requirement is fairly standard in franchising, as franchisors typically want to maintain control over who enters their system and ensure they meet certain financial criteria. A prospective Burros Fries franchisee should be aware that any sale is subject to the franchisor's approval, and the franchisor has broad discretion to reject a potential buyer based on their debt load.