What standards must a proposed transferee meet to be approved as a Burros Fries franchisee?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
acknowledges and agrees that an approval of a proposed transfer shall not be deemed to be an approval of the terms, nor anyindication as to any likelihood of success or economic viability;
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- 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
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- 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.
C. Transfer, Sale or Assignment by Franchisor and Franchisor's Right of First Refusal
Franchisee acknowledges that we have an unrestricted right to sell, transfer or assign its rights or obligations under this Agreement to any transferee or legal successor of ours.
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 ensure the proposed transferee meets several standards to gain approval from Burros Fries. The franchisee must submit copies of the draft Asset Purchase Agreement or Ownership Purchase Agreement, along with any draft Promissory Notes and Security Agreements, regardless of financing sources. Burros Fries retains the right to reject any proposed purchase if, in their opinion, the transferee is taking on too much debt.
Additionally, after the transfer, the franchisee and its owners/principals must agree not to compete with Burros Fries, divert business, or attempt to hire employees, adhering to restrictions similar to those outlined in Section 19.C of the Franchise Agreement. They also cannot identify themselves as current or former Burros Fries business owners or use any marks or indicia associated with Burros Fries, except concerning other Burros Fries businesses they may own and operate.
These conditions ensure that the brand's standards are upheld by the new franchisee and that the outgoing franchisee does not engage in activities that could harm the Burros Fries system. The approval of a transfer does not indicate any guarantee of success or economic viability for the new franchisee. Franchisees are advised not to rely on Burros Fries to evaluate the terms of any proposed transfer.