If modifications or discontinuations of the Burros Fries system are required, does Burros Fries have any liability to the franchisee?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee agreesthat we may periodically and upon written notice, add to, modify or change such approved products, supplies, kitchen equipment, vendors and suppliers and there is no limit in our right do so. Franchisee promises to promptly accept and implement, in the operation of its Business, all such additions, modifications and changes at Franchisees expense.
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.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, Burros Fries has the right to periodically add to, modify, or change approved products, supplies, kitchen equipment, vendors, and suppliers with no limit to their right to do so. The franchisee is responsible for promptly accepting and implementing these changes at their own expense. This means that Burros Fries can change the requirements for the franchise, and the franchisee must adapt to these changes financially.
This clause gives Burros Fries significant control over the franchise's operations and offerings. While this allows Burros Fries to maintain brand consistency and adapt to market changes, it also places the financial burden of these changes on the franchisee. Franchisees need to be prepared for potential costs associated with these modifications, such as purchasing new equipment or supplies, or altering their menu.
In the event of significant damage, loss, or destruction to the Burros Fries business, the franchisee bears the entire risk. The franchisee must notify Burros Fries within ten days of any such loss. Even with such loss, the franchisee remains obligated to pay royalty fees and all other amounts owed. Burros Fries has the option to require the franchisee to repair the business to a satisfactory condition or, if the business is substantially destroyed, to repair the existing business or find an alternative location within the territory within 90 days, with a possible 30-day extension at Burros Fries' discretion. Failure to comply may result in termination of the agreement.
These terms highlight the importance of a franchisee's financial stability and ability to adapt to changes mandated by Burros Fries. Prospective franchisees should carefully consider the potential costs associated with these requirements and ensure they have sufficient capital to meet these obligations. Additionally, understanding the insurance requirements and potential business interruption scenarios is crucial for mitigating financial risks.