What are some of the reasonable conditions that Burros Fries may impose when granting consent to a transfer?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
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
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. 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 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, when a franchisee seeks to transfer their franchise, Burros Fries may impose certain conditions. The franchisee and their owners/principals must agree not to compete with Burros Fries, divert business, or attempt to hire employees after the transfer, adhering to restrictions similar to those outlined in Section 19.C of the Franchise Agreement.
Furthermore, the franchisee and their owners/principals cannot identify themselves as current or former Burros Fries business owners, use any marks or imitations thereof, or utilize any trade names or commercial symbols that suggest a connection with Burros Fries, except concerning other Burros Fries businesses they may own and operate.
The franchisee must also provide copies of the draft Asset Purchase Agreement or Ownership Purchase Agreement, along with any promissory notes and security agreements, regardless of financing sources. Burros Fries retains the right to reject a proposed transfer if, in their opinion, the transferee has taken on too much debt. These conditions ensure the continued protection of the Burros Fries brand and system, and the financial stability of new franchise owners.