What happens if a Burros Fries franchisee's business property is sold after levy?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
As between us and the Franchisee, the Franchisee shall bear the entire risk of any damage, loss, theft or destruction to the Business from any cause whatsoever or requisition of the Business by any governmental entity or the taking of title to the Business by eminent domain or otherwise (collectively, "Loss"). The Franchisee shall advise us in writing within ten (10) days of any such Loss. No such Loss shall relieve the Franchisee of the obligation to pay Royalty Fees and all other amounts owed hereunder. In the event of any such Loss, we, at our option, may: (a) if the Loss has not materially impaired the Business (in our reasonable Business Judgment), require that the Franchisee, upon our demand, place the Business in good condition and repair reasonably satisfactory to us as mentioned above; or (b) if the Loss has materially impaired the Business and it is substantially destroyed, (in our sole judgment), we may require the Franchisee to repair the existing Business or find an alternative location within the Territory within ninety (90) days or soonest possible timeframe according to Franchisee's lease. We may extend this period an additional thirty (30) days at our discretion and failure of Franchisee to comply may result in termination of this Agreement. Upon termination, the Franchisee must return to us the System (including
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
Based on the 2024 Burros Fries Franchise Disclosure Document, the document does not explicitly detail the procedures or implications should a franchisee's business property be sold after a levy. The FDD does outline the franchisee's responsibilities in the event of a loss, which includes damage, theft, or destruction of the business, or requisition by a governmental entity.
However, the FDD states that the franchisee bears the entire risk of any loss to the business from any cause. The franchisee must notify Burros Fries in writing within ten days of any such loss. Such a loss does not relieve the franchisee of the obligation to pay royalty fees and other amounts owed.
In the event of a loss, Burros Fries has the option to require the franchisee to repair the business to a satisfactory condition if the loss has not materially impaired the business. If the loss has materially impaired the business, Burros Fries may require the franchisee to repair the existing business or find an alternative location within the territory within ninety days, with a possible extension of thirty days at Burros Fries' discretion. Failure to comply may result in termination of the agreement. Upon termination, the franchisee must return the system, and Burros Fries has the first right of refusal to purchase all assets, with the purchase price reduced to account for the loss the franchisee incurred.
Since the document does not specifically address the scenario of a property sale after levy, it is important for a prospective franchisee to seek clarification from Burros Fries regarding this situation. Understanding the franchisor's policies and procedures in such a case is crucial for making an informed investment decision.