If a Burros Fries franchisee wishes to sell their interest, what sections of the agreement must they comply with?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee expressly consents to any such discussions by us and we may contact any proposed transferee directly regarding such matters or otherwise;
Neither Franchisee nor any transferee shall rely on us to assist in the evaluation of the terms of any proposed transfer.
Franchisee acknowledges and agrees that an approval of a proposed transfer shall not be deemed to be an approval of the terms, nor anyindication as to any likelihood of success or economic viability;
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 considering a transfer of ownership must adhere to specific conditions outlined in the franchise agreement. Burros Fries retains the right to engage in discussions with potential transferees and may directly contact them. The franchisee is responsible for evaluating the terms of any proposed transfer, and neither the franchisee nor the transferee should rely on Burros Fries for assistance in this evaluation. Approval of a transfer by Burros Fries does not constitute an endorsement of the terms or guarantee the success or economic viability of the transfer.
Following the transfer, the franchisee, along with their owners and principals, must agree not to compete with Burros Fries, divert business, or attempt to hire employees. These restrictions must be acceptable to Burros Fries and substantially similar to those described in Section 19.C of the agreement. Furthermore, the franchisee and their associated parties must not identify themselves as current or former Burros Fries business owners or franchise owners, nor use any marks or indicia associated with Burros Fries, as detailed in Sections 24.A and 24.C of the agreement.
The franchisee is also 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 reserves the right to reject any proposed purchase if, in their opinion, the proposed transferee has taken on too much debt. These stipulations ensure that Burros Fries maintains control over who becomes a franchisee and that the brand's standards and reputation are upheld even after a transfer of ownership.