What obligations is the Franchisor responsible for after taking possession of the Premises for a Burros Fries franchise?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
Except as provided in the Franchise Agreement, the Franchisor will not take possession of the Premises under this Assignment until and unless there is a default by Franchisee under the Lease or a termination, cancellation, rescission or expiration of the Franchisee's rights, or a default by Franchisee, under the Franchise Agreement. In such event(s), the Franchisor (or its designee) may (but has no obligation to) take possession of the Premises and assume the Franchisee's rights under the Lease, and, in such event, Franchisee will have no further right, title or interest in or under the Lease or to the Premises, all such rights thereby passing to the Franchisor or its designee, without the Landlord's further consent. The Franchisee will fully cooperate therewith, and do all acts necessary or appropriate thereto. The Franchisor will have no liabilities or obligations of any kind arising from, or in connection with, this Assignment, the Lease, the Premises or otherwise until and unless the Franchisor takes possession of the Premises pursuant to this Assignment and, in any event, the Franchisor will only be responsible for those obligations accruing with respect to the Lease after the date of such express assumption. Upon taking possession of the Premises, Franchisor shall be obligated from that date forward to perform all of the duties and obligations of Franchisee under the Lease. Franchisor shall notify Landlord, in writing, within five (5) days of taking possession of the Premises.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, Burros Fries has specific obligations if they take possession of the premises. Burros Fries is not obligated to take possession of the premises unless the franchisee defaults under the lease or the Franchise Agreement, or if the franchisee's rights are terminated, canceled, rescinded, or expired. If Burros Fries does take possession, they must notify the landlord in writing within five days.
Once Burros Fries takes possession of the premises, they assume the franchisee's rights under the lease and the franchisee no longer has any rights to the lease or premises. Burros Fries is only responsible for the obligations that accrue with respect to the lease after the date they take possession. From that date forward, Burros Fries is obligated to perform all of the franchisee's duties and obligations under the lease.
This arrangement protects Burros Fries by ensuring they are not liable for any prior obligations of the franchisee. It also provides a mechanism for Burros Fries to maintain control over the location and continue operating the franchise if the franchisee fails to meet their obligations. A prospective franchisee should carefully review the lease agreement and the franchise agreement to fully understand the conditions under which Burros Fries might take possession of the premises and the implications for the franchisee.