Does Burros Fries have the right to approve all transfers initiated by the franchisee?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Franchise Agreement | Summary |
|---|---|---|
| k. "Transfer" by you-definition | FA – Section 22.B | Includes transfer of the FA and Business assets by you. |
| 1. Our approval of transfer by you. | FA – Sections 22.C and 22.E | FA – We have the right to approve all transfers by you. |
| m. Conditions of our approval of transfer. | FA – Sections 22.C and 22.E | FA – Full compliance; transferee qualifies; all amounts due are paid in full; completion of training by transferee; transfer fee paid; transferee agrees to be bound by all terms of FA; you sign and deliver other required documents including a release. |
| n. Our right of first refusal to acquire your Business. | FA – Sections 22.C and 22.E | FA – We have the right to match any offers. |
| o. Our option to purchase your assets upon termination or non-renewal. | FA – Sections 22.F and 24.G | FA – Purchase for fair market value determined by appraisal if parties are unable to agree. |
| p. Your death or disability. | FA – Section 22.D | FA – Franchise must be assigned to approved buyer within six (6) months. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 46–49)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, Burros Fries retains the right to approve all transfers initiated by a franchisee. This means that if a franchisee wishes to sell their franchise to someone else, they cannot do so without the express consent of Burros Fries.
This approval process is further defined by certain conditions. Burros Fries will only approve a transfer if the franchisee is in full compliance with the franchise agreement, the proposed transferee meets Burros Fries's qualifications, all outstanding amounts owed to Burros Fries are paid, the transferee completes the required training, the transfer fee is paid, and the transferee agrees to adhere to all terms of the franchise agreement. Additionally, the franchisee must sign and deliver any other required documents, including a release.
Furthermore, Burros Fries also has the right of first refusal to acquire the franchisee's business, allowing them to match any offers made by potential buyers. These provisions ensure that Burros Fries maintains control over who operates its franchises and that any transfer meets their standards and financial obligations. This is a fairly standard practice in franchising, as franchisors want to ensure that new franchisees are well-qualified and that the brand's reputation is maintained.
In the event of the franchisee's death or disability, the franchise must be assigned to an approved buyer within six months. This highlights the importance of having a succession plan in place or ensuring that there is a clear process for transferring the franchise in unforeseen circumstances. Franchisees should carefully consider these transfer conditions and discuss them with Burros Fries to fully understand the implications.