At what value will Burros Fries purchase the assets and items bearing the Burros Fries names and marks?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
In the event of any such Loss, we, at our option, may: (a) if the Loss has not materially impaired the Business (in our reasonable Business Judgment), require that the Franchisee, upon our demand, place the Business in good condition and repair reasonably satisfactory to us as mentioned above; or (b) if the Loss has materially impaired the Business and it is substantially destroyed, (in our sole judgment), we may require the Franchisee to repair the existing Business or find an alternative location within the Territory within ninety (90) days or soonest possible timeframe according to Franchisee's lease. We may extend this period an additional thirty (30) days at our discretion and failure of Franchisee to comply may result in termination of this Agreement. Upon termination, the Franchisee must return to us the System (including
all materials), and we have the first right of refusal to purchase all Assets (as described in Section 24.G), but any such purchase price will be reduced to account for the Loss the Franchisee incurred.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, in the event of damage, loss, theft, or destruction to the business, Burros Fries has the first right of refusal to purchase all assets. However, the purchase price will be reduced to account for the loss the franchisee incurred.
This means that if a Burros Fries franchise location experiences a significant loss, such as a fire or natural disaster, that materially impairs the business, Burros Fries has the option to buy back the assets. This clause protects Burros Fries by allowing them to regain control of a damaged location and potentially rebuild or re-franchise it.
For a prospective franchisee, this clause presents both a risk and an opportunity. The risk is that the purchase price will be reduced due to the loss incurred. The opportunity is that the franchisee can recoup some of their investment in a situation where the business is no longer viable. It is important for franchisees to understand how the purchase price will be determined in such a situation and to ensure they have adequate insurance coverage to protect their investment.