What standards must the transferee meet to acquire a Burros Fries franchise?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
ny 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.
We have a right of first refusal regarding any proposed sale, assignment or transfer by Franchisee subject to this Agreement. During the term of this Agreement, if Franchisee, any of its Owners wish to sell, assign or otherwise transfer an interest in this Agreement, the Franchised Business and/or its assets, or an ownership interest in Franchisee (collectively, the "Interest"), then Franchisee will comply with the requirements of Sections 22.B, 22.C and 22.E of this Agreement.
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 certain standards. Burros Fries retains significant control over who can become a franchisee within their system.
Specifically, the franchisee must submit copies of the draft Asset Purchase Agreement or Ownership Purchase Agreement, along with any draft Promissory Notes and Security Agreements, to Burros Fries for review. This applies whether the financing is franchisee-financed or lender-financed. Burros Fries reserves the right to reject any proposed purchase if, in their opinion, the proposed transferee is taking on too much debt. This clause protects the Burros Fries system from new owners who may be financially unstable.
Additionally, after the transfer, the original franchisee, along with their owners and principals, must agree not to compete with the Burros Fries business, divert business, or attempt to hire employees. These restrictions must be acceptable to Burros Fries and substantially similar to those outlined in Section 19.C of the Franchise Agreement. The franchisee and its owners/principals 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 non-compete and confidentiality clauses are standard in franchising to protect the brand and system.
These conditions ensure that any new franchisee meets Burros Fries's financial standards and that the outgoing franchisee does not undermine the business after the transfer. A prospective franchisee should carefully review these requirements and consult with Burros Fries to fully understand the transfer process and approval criteria.