Is Burros Fries obligated to assist a franchisee in locating a buyer for their Burros Fries business?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
le, performance of the Franchise, etc.). Franchisee expressly consents to any such discussions by us and we may contact any proposed transferee directly regarding such matters or otherwise;
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- 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;
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- 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
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- 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.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, franchisees cannot rely on Burros Fries to assist in evaluating the terms of a proposed transfer of ownership. However, Burros Fries retains the right to discuss the transfer with any potential buyer directly. Burros Fries's approval of a transfer does not indicate any assurance of success or economic viability for the business under new ownership.
Franchisees looking to sell their Burros Fries business must submit copies of the draft Asset Purchase Agreement or Ownership Purchase Agreement, including any Promissory Notes and Security Agreements, to Burros Fries for review, regardless of financing sources. Burros Fries can reject a proposed purchase if they believe the potential buyer is taking on too much debt.
After a transfer, the franchisee, its owners, and principals must adhere to non-compete and non-solicitation agreements similar to those in the original franchise agreement. They also cannot identify themselves as current or former Burros Fries business owners or use any Burros Fries trademarks or symbols, except for other Burros Fries businesses they may own and operate.
While Burros Fries does not assist in locating a buyer, they do maintain certain controls over the transfer process to protect their brand and ensure the financial stability of the new owner. Prospective franchisees should carefully consider these conditions and restrictions when evaluating the potential resale value of a Burros Fries franchise.