In the context of an Angry Chickz franchise assignment, what happens if the transferee/assignee chooses to assume the existing agreement?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
- (j) that the transferee/assignee shall have agreed, under a written assumption agreement approved by Company, that at closing, the transferee/assignee shall, at Company's option, either (a) assume this Agreement; provided however, that such assumption shall not relieve Franchisee (as transferor/assignor) of any continuing obligations; or (b) execute a replacement franchise or license agreement on the then-current form of franchise agreement used by Company in the State in which the Franchised Business is being operated, provided, however, that the term of the replacement franchise or license agreement shall be, at Company's option, the remaining term of this Agreement, unless Company otherwise agrees; and, at Company's request, the transferor/assignor shall have executed a continuing guaranty in favor of Company of the performance and payment by the transferee/assignee of all obligations and debts to Company and its Affiliates under the replacement franchise or license agreement;
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, in the event of a franchise assignment, the transferee/assignee has the option to assume the existing franchise agreement. However, even if the transferee/assignee assumes the agreement, the original franchisee (transferor/assignor) is not relieved of any continuing obligations under the agreement. This means the original franchisee remains liable for any breaches or financial responsibilities that the new franchisee might incur.
Angry Chickz requires that the transferee/assignee agree to a written assumption agreement approved by Angry Chickz. This agreement outlines the terms under which the transferee will take over the franchise. Alternatively, at Angry Chickz's option, the transferee/assignee can execute a replacement franchise agreement based on the then-current form used by Angry Chickz in the state where the franchised business operates. The term of the replacement agreement will be the remaining term of the original agreement, unless Angry Chickz agrees otherwise.
Furthermore, Angry Chickz may request that the transferor/assignor execute a continuing guaranty in favor of Angry Chickz, ensuring the performance and payment of all obligations and debts by the transferee/assignee under the replacement franchise agreement. This provides Angry Chickz with an additional layer of security in case the new franchisee fails to meet their obligations. This is a fairly common practice in franchising, as franchisors want to ensure a smooth transition and protect their brand standards and financial interests.