Must the transferee of a Burros Fries franchise execute the then-current form of the franchise agreement?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
rectors, shareholders, and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state, and local laws, rules, and ordinances;
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- The transferee (and, if the transferee is other than an individual, such principals and/or owners of a beneficial interest in the transferee as we may request)shall enter into a written assumption agreement, in a form satisfactory to us, assuming and agreeing to discharge all of Franchisee's obligations, known by transferee after reasonable inquiry, under this Agreement and/or any new franchise agreement;
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- The transferee must meet our subjective and objective standards, including all quality standards, experience, talent, skills, educational, managerial, business and financial capacity; has the aptitude and ability to operate the Business; and has adequate financial resources and capital to operate the Business;
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- The transferee (and, if an Entity its Owners of a beneficial interest in the transferee as we may request) shall execute and agree to be bound by the then current form of this Agreement, which form may contain provisions that materially alter the rights or obligations under this Agreement.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, a transferee may be required to execute the then-current form of the franchise agreement. Specifically, the transferee (and any beneficial owners, if the transferee is an entity) must execute and agree to be bound by the current form of the Franchise Agreement, which may include provisions that significantly alter the rights or obligations under the original agreement.
Alternatively, Burros Fries has the discretion to require the transferee to sign the then-current form of the agreement, with the term ending on the original agreement's expiration date, including any renewal term. In this case, the transferee must sign all ancillary agreements required under the current form, which will supersede the original agreement. Burros Fries may also make additional changes to the terms of the agreement, including higher royalty fees, advertising contributions, and renewal rights.
This means that a prospective buyer of a Burros Fries franchise may be subject to different, potentially more onerous, terms than the original franchisee. This could include increased costs or altered operational requirements. A prospective franchisee should carefully consider these potential changes and their financial impact before agreeing to a transfer.