Does Burros Fries offer indirect financing arrangements to franchisees?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
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 10 — FINANCING (FDD page 27)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, the franchisor, Burros Fries, does not directly offer financing to franchisees. However, Item 22 discusses the requirements for transferring ownership, which includes instances where the franchisee finances the transfer. Specifically, if a franchisee is selling their business and providing financing to the buyer, Burros Fries requires copies of the draft Asset Purchase Agreement or Ownership Purchase Agreement, all draft Promissory Notes, and Security Agreements.
Burros Fries retains the right to reject a proposed transfer if the transferee (buyer) is taking on too much debt, in the franchisor's opinion. This clause protects the brand by ensuring that new owners are financially stable and capable of running the franchise successfully.
While Burros Fries doesn't offer direct financing, they do scrutinize financing arrangements made between franchisees and transferees to safeguard the financial health of the franchise system. A prospective franchisee should inquire with Burros Fries about any preferred lending partners or resources that may be available to assist with financing, even though the franchisor itself does not provide it.