What obligations of the Burros Fries franchisee must the transferee assume?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall have substantially complied with all of the terms and provisions of this Agreement, any amendment hereof or successor hereto, or any other agreements between the Franchisee and our subsidiaries or affiliates and, at the time of transfer, shall not bein default;
Franchisee shall have executed a general release, in a form satisfactory to us, of any and all claims against us and our officers, directors, shareholders, and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state, and local laws, rules, and ordinances;
The transferee (and, if the transferee is other than an individual, such principals and/or owners of a beneficial interest in the transferee as we may request)shall enter into a written assumption agreement, in a form satisfactory to us, assuming and agreeing to discharge all of Franchisee's obligations, known by transferee after reasonable inquiry, under this Agreement and/or any new franchise agreement;
The transferee must meet our subjective and objective standards, including all quality standards, experience, talent, skills, educational, managerial, business and financial capacity; has the aptitude and ability to operate the Business; and has adequate financial resources and capital to operate the Business;
The transferee (and, if an Entity its Owners of a beneficial interest in the transferee as we may request) shall execute and agree to be bound by the then current form of this Agreement, which form may contain provisions that materially alter the rights or obligations under this Agreement.
Alternatively, we may in our sole discretion require the transferee to sign the then current form of this Agreement then being used by us, but where the term will end on the expiration date of this Agreement and with such renewal term, if any, as may be provided by this Agreement and the following requirements apply: (i), the transferee shall sign all other ancillary agreements as we may require for the Franchise Business as required under the then current form of this Agreement, which agreements shall supersede this Agreement in all respects, and (ii) additional changes to the terms of the Agreement may be made, at our sole discretion, which include, without limitation, higher royalty fee payments, advertising contributions and renewal rights;
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, a transferee (the person or entity buying the franchise) must assume certain obligations of the franchisee (the seller). Specifically, the transferee must enter into a written assumption agreement, in a form satisfactory to Burros Fries, agreeing to fulfill all of the seller's obligations under the existing Franchise Agreement. These obligations must be known to the transferee after reasonable inquiry.
Additionally, the transferee may be required to execute the then-current form of the Franchise Agreement, which could materially alter the rights and obligations outlined in the original agreement. This new agreement may include higher royalty fee payments, increased advertising contributions, and different renewal rights. The transferee may also need to sign other ancillary agreements required for the Burros Fries franchise under the current form of the agreement, which would supersede the original agreement in all respects.
Furthermore, the selling franchisee must have substantially complied with all terms and provisions of the Franchise Agreement, any amendments, or other agreements with Burros Fries or its affiliates and must not be in default at the time of the transfer. The selling franchisee must also execute a general release of any and all claims against Burros Fries and its officers, directors, shareholders, and employees. The transferee must also meet Burros Fries' subjective and objective standards, including quality standards, experience, talent, skills, educational, managerial, business, and financial capacity, and have adequate financial resources and capital to operate the business.