Is Burros Fries' determination of a National Account final and binding?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
d) If Franchisee elects not to provide Products or perform Services to a National Account in conformity with the terms and conditions of the National Account bid or contract, orfails to make an election within the time specified by us, of being offered the opportunity by us, we shall have the right, exercisable in our sole discretion, to:
i.
Provide directly or through any other affiliate or franchisee utilizing our Marks, Products and/or Services to a National Account location(s) located anywhere on the terms and conditions contained in the National Account bid or contract; and/or
- ii.
Contract with another party to provide Products and/or perform Services to the National Account location(s) located anywhere on the terms and conditions contained in the National Account bid or contract between us and the National Account, utilizing our Marks or any trademarks, service marks or trade names.
- e) Neither the direct provision by us (or a franchisee, affiliate or agent of ours) of Products or Services to National Accounts as authorized in (i) above, nor if we contract with another party to provide such Products and perform Services as authorized in (ii) above, shall constitute a violation of Section 6 of this Agreement relating to the Franchisee's Territory, even if such Products and/or Services are offered or performed from a location within the Territory or Non-Traditional Location.
Franchisee disclaims any compensation for Products provided or Services performed by others pursuant to this section.
If Franchisee is provided a Territory, Franchisee's rights in the Territory are exactly (and only) as expressly set forth in this Section 6. Except as expressly provided in this Agreement, Franchisee has no right to exclude, control or impose conditions on the location, operation, or otherwise of present or future Burros & Fries (or any other brand) units or distribution channels of any type, franchised or companyowned, regardless of their location or proximity to the Business and whether or not they sell Products or provide Services within that area. Franchisee does not have any rights with respect to other and/or related businesses, products and/or services, in which we or any of affiliates may be involved, now or in the future.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries' 2024 Franchise Disclosure Document, if a franchisee chooses not to provide products or services to a National Account under the terms offered, or fails to respond within the specified time, Burros Fries has the sole right to provide those products or services directly, or through another franchisee, affiliate, or third party. This applies to any National Account location, regardless of its location.
This means that Burros Fries retains ultimate control over National Accounts and how they are serviced. A franchisee cannot prevent Burros Fries from serving a National Account, even if it is within the franchisee's territory. The franchisee also gives up any right to compensation for products or services provided by others to National Accounts.
This clause emphasizes the limited territorial rights granted to Burros Fries franchisees. The FDD states that a franchisee's rights within their territory are strictly defined in Section 6 of the agreement, and they cannot exclude, control, or impose conditions on other Burros Fries units or distribution channels, whether franchised or company-owned. This extends to other businesses, products, or services that Burros Fries or its affiliates may be involved in.
For a prospective franchisee, this highlights the importance of understanding the scope and limitations of their territorial rights. While a territory may be granted, Burros Fries retains significant control over National Accounts and other distribution channels, which could impact a franchisee's potential revenue and market share. It is crucial to carefully review Section 6 of the franchise agreement to fully understand these limitations.