Can Burros Fries modify or terminate the referral program?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
ise Agreement Sections 6, 12.H and 23.F).
We encourage the owners of all Franchised Businesses to work out a referral relationship and advertising strategy or arrangement if they are within close proximity of each other (defined as being within a ten-mile radius of each other). We must be notified of all such arrangements.
We reserve the right to issue binding policies to coordinate marketing councils and/or advertising cooperative programs. For example, we may require that all franchisees within close proximity to consumer food shows, conventions or exhibitions where food products are being sold to participate in the cost and benefit of the show. All such programs and policies are our proprietary trade secrets. In such programs, we may require the customer that is acquired through such programs, to be served by the closest or other franchisee and may or may not require franchisees serving the person to do so at a minimum price or pay a reasonable referral fee.
Any rights not expressly granted to you are reserved to us. Such rights reserved to us include, but are not limited to:
- (1) Advertise, market and sell Burros & Fries branded products other than those sold by our System (including menu and retail items), kitchen equipment (if we choose to develop kitchen equipment in the future);
- (2) Advertise and offer products (including menu and retail items) and services to promote the System through the Internet and/or other similar venues no matter where the person is based to brand the System and/or fulfill demand anywhere;
- (3) Sell, distribute or offer anywhere products (including menu and retail items), kitchen equipment (if we choose to develop kitchen equipment in the future) or services to anyone from anywhere through any alternative or other channel of distribution, other than local Burros & Fries Businesses providing products (including menu and retail items) and services whether or not we are using the Marks or System and on any terms we deem appropriate. We have this right whether or not we are using the Marks or System; or are acting inside or outside your Territory as designated on your Franchise
Agreement;
- (4) Develop and distribute any proprietary products and kitchen equipment (if we choose to develop kitchen equipment in the future) that have been branded with our Mark or logo or different branded products through any outlet located anywhere (including, by way of illustration, supermarkets, specialty food stores, discount club chains, retail stores, over the Internet and/or similar venues) and on any terms and conditions we deem appropriate. If we decide to develop and distribute products or kitchen equipment, you will receive no compensation from us for such sales inside your Territory or within your Location, unless agreed otherwise in writing by us;
- (5) Implement advertising cooperative programs which may allow us or others to solicit or sell to persons anywhere.
Source: Item 5 — INITIAL FEES (FDD pages 11–12)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, the company encourages franchisees to establish referral relationships and advertising strategies with other franchisees, especially those within a ten-mile radius. Burros Fries requires notification of these arrangements. The document does not explicitly state that Burros Fries can modify or terminate the referral program. However, it does state that Burros Fries reserves the right to issue binding policies to coordinate marketing councils and/or advertising cooperative programs.
Burros Fries retains rights not expressly granted to the franchisee. These include the right to advertise, market, and sell Burros & Fries branded products through various channels, including the internet, and to sell or distribute products and services through alternative channels. This broad reservation of rights suggests that Burros Fries has significant control over marketing and advertising strategies, which could impact any referral programs established between franchisees.
Furthermore, the FDD states that for any default of the Franchise Agreement, as an alternative to termination, Burros Fries may modify or completely eliminate any rights that a franchisee may have with respect to the protected status of their territory, effective ten days after written notice. This clause indicates that Burros Fries can alter territorial rights as a consequence of a franchisee's default, which could indirectly affect referral programs if they are tied to territorial agreements.
While the document does not directly address the modification or termination of referral programs, the broad rights retained by Burros Fries and the ability to modify territorial rights suggest that the company has the power to make changes that could impact these programs. A prospective franchisee should seek clarification from Burros Fries regarding the specifics of how referral programs are managed and the extent to which Burros Fries can alter or discontinue them.