What must a Burros Fries franchisee have complied with to be able to transfer the franchise?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee and its Owners and/or Principals will agree not to compete, not to divert business, or attempt to hire employees, after the transfer in accordance with restrictions acceptable to us and substantially similar to those described in Section 19.C of this Agreement; and
Franchisee and its Owners and/or Principals will not directly or indirectly at any time or in any manner (except with respect to other Burros & Fries Business that Franchisee or its Principals own and operate) identify itself or any business as a current or former Burros & Fries business owner or as one of our franchise owners; use any Mark, any colorable imitation of a Mark, or other indicia of a Burros & Fries Business in any manner or for any purpose; or utilize for any 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.
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 meet several conditions. The franchisee must agree not to compete, divert business, or attempt to hire employees after the transfer, adhering to restrictions similar to those in Section 19.C of the agreement. Additionally, the franchisee and their owners/principals cannot identify themselves as current or former Burros & Fries business owners or use any marks or indicia associated with Burros & Fries, as detailed in Sections 24.A and 24.C of the agreement.
Furthermore, the franchisee is required to submit copies of the draft Asset Purchase Agreement or Ownership Purchase Agreement, along with any draft Promissory Notes and Security Agreements, to Burros Fries, regardless of financing sources. Burros Fries retains the right to reject the proposed transfer if, in their opinion, the transferee has taken on too much debt.
These stipulations ensure that Burros Fries maintains control over its brand and operations even after a franchise is transferred. By requiring adherence to non-compete agreements and restrictions on using the brand's identity, Burros Fries protects its market position and brand reputation. The financial review of the transferee ensures the new owner is financially stable, reducing the risk of business failure and maintaining the overall health of the franchise system. Prospective franchisees should carefully review these transfer requirements to understand the full scope of their obligations when considering a future sale of their Burros Fries franchise.