Under what circumstances does Burros Fries have the option to purchase the assets of a Burros Fries franchise?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Franchise Agreement | Summary |
|---|---|---|
| o. Our option to purchase your | FA – Sections 22.F and 24.G | FA – Purchase for fair market value |
| assets upon termination or non- | determined by appraisal if parties are | |
| renewal. | unable to agree. |
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 has the option to purchase a franchisee's assets upon termination or non-renewal of the franchise agreement. The purchase price will be the fair market value of the assets. If Burros Fries and the franchisee cannot agree on the fair market value, it will be determined by an appraisal.
This provision in the franchise agreement protects Burros Fries's interests in maintaining control over its brand and operations. By having the option to purchase a franchise's assets upon termination or non-renewal, Burros Fries can ensure that the location continues to operate as a Burros Fries restaurant or can be repurposed in a way that aligns with the company's overall strategy. This is a fairly standard clause in most franchise agreements.
For a prospective franchisee, this means that if their franchise agreement is terminated (either by the franchisee or by Burros Fries for cause) or if the franchisee chooses not to renew the agreement at the end of its term, Burros Fries has the right to buy the franchise's assets. The franchisee will be compensated for the fair market value of those assets, but they may not have a say in who ultimately operates the location or how it is used in the future. It is important to understand the implications of this clause before signing the franchise agreement.