If a Burros Fries franchisee sells ownership interests, is the franchisee required to indemnify Burros Fries from liabilities arising from the sale?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
In addition to its other obligations, such as obtaining our prior written approval, if Franchisee sells or offers to sell ownership interests, the sale of which is regulated by any applicable law, Franchisee must: (i) fully comply with all applicable laws, (ii) disclose to offerees and purchasers that neither we nor our employees, affiliates or agents are an issuer or underwriter, or are in any way liable or responsible for the offering, (iii) ensure that we have a reasonable time to review any reference to us or our franchisees in any prospectus or offering documents before their distribution or use, (iv) pay our actual legal costs incurred for our review, (v) indemnify us, our officers, owners, directors, employees, affiliates, and agents from any liability, cost, damage, claim, and expense and from any and all obligations to any person, entity or governmental agencies arising out of or relating to the offer, sale or continuing investment, (vi) sign such further indemnities and provide such further assurances as we may reasonably require and (vii) disclose our ownership rights to all trademarks, service marks, trade names, logos, trade secrets, copyrights, and patents.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, if a franchisee sells or offers to sell ownership interests, and the sale is regulated by applicable law, the franchisee has specific obligations to Burros Fries. These obligations include indemnifying Burros Fries and its related parties. Specifically, the franchisee must indemnify Burros Fries, its officers, owners, directors, employees, affiliates, and agents from any liability, cost, damage, claim, and expense, and from any and all obligations to any person, entity, or governmental agencies arising out of or relating to the offer, sale, or continuing investment.
This means that if a franchisee's sale of ownership interests leads to legal or financial issues for Burros Fries, the franchisee is responsible for covering those costs. This requirement protects Burros Fries from liabilities stemming from the franchisee's transactions. The franchisee must also sign further indemnities and provide further assurances as Burros Fries may reasonably require.
Furthermore, the franchisee must ensure that Burros Fries has a reasonable time to review any reference to them or their franchisees in any prospectus or offering documents before their distribution or use and pay their actual legal costs incurred for their review. The franchisee must also disclose Burros Fries' ownership rights to all trademarks, service marks, trade names, logos, trade secrets, copyrights, and patents. These stipulations ensure that Burros Fries maintains control over its brand and is protected from potential misrepresentations or legal issues arising from the sale of ownership interests by the franchisee.