What standards must a proposed Burros Fries transferee meet to be approved?
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, a franchisee looking to transfer their franchise must meet certain conditions to gain approval from Burros Fries. The franchisee must submit copies of the draft Asset Purchase Agreement or Ownership Purchase Agreement, along with all draft Promissory Notes and Security Agreements, with the transferee, regardless of financing. Burros Fries retains the right to reject any proposed purchase if, in their opinion, the proposed transferee has taken on too much debt.
Additionally, the franchisee and its owners/principals must agree not to compete, divert business, or attempt to hire employees after the transfer, adhering to restrictions similar to those outlined in Section 19.C of the agreement. They must also agree not to identify themselves or any business as a current or former Burros Fries business owner or franchise owner, and avoid using any marks or indicia associated with Burros Fries, as described in Sections 24.A and 24.C of the agreement.
These stipulations ensure that the transfer does not negatively impact Burros Fries's brand integrity, competitive position, or financial stability. The franchisor maintains control over who becomes a franchisee and can reject transfers that pose a financial risk or competitive threat. Prospective franchisees should carefully review these transfer conditions and understand the franchisor's approval rights before entering into a franchise agreement.