Must a Burros Fries franchisee be in compliance with all agreements to transfer the 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.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, a franchisee looking to transfer their franchise must adhere to specific stipulations. The franchisee must submit copies of the draft Asset Purchase Agreement or Ownership Purchase Agreement, along with any draft Promissory Notes and Security Agreements, to the franchisor, regardless of financing sources.
Burros Fries retains the right to reject a proposed transfer if, in their opinion, the potential transferee is taking on too much debt. This clause protects the brand by ensuring new franchisees are financially stable and capable of running the business successfully.
Furthermore, after the transfer, the franchisee and their owners/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 agreement. They also cannot identify themselves as current or former Burros Fries business owners or use any marks or indicia associated with the brand, except concerning other Burros & Fries businesses they may own and operate. These measures safeguard Burros Fries's market position and brand identity.