What kind of standards, both subjective and objective, must a Burros Fries transferee meet?
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 the 2024 Burros Fries Franchise Disclosure Document, a transferee must meet certain standards for a transfer to be approved. Burros Fries may contact any proposed transferee directly to discuss matters related to the transfer. However, neither the franchisee nor any transferee should rely on Burros Fries to assist in evaluating the terms of any proposed transfer. Approval of a proposed transfer does not indicate approval of the terms or any likelihood of success or economic viability.
Furthermore, the franchisee, owners, and principals 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. They must also refrain from identifying themselves as current or former Burros Fries business owners or using any marks or indicia associated with Burros Fries, as described in Sections 24.A and 24.C of the agreement.
The franchisee must submit copies of the draft Asset Purchase Agreement or Ownership Purchase Agreement, along with any promissory notes and security agreements, regardless of financing. Burros Fries has the right to reject any proposed purchase if, in their opinion, the proposed transferee has taken on too much debt. These standards ensure that the transferee is financially stable and will not harm the Burros Fries brand or business operations after the transfer.