Is an Angry Chickz developer allowed to offer securities to the public without the company's consent?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 7.3.2 Developer shall not, directly, or indirectly, pledge, encumber, hypothecate or otherwise grant any third party a security interest in this Agreement in any manner whatsoever without the prior express written consent of Company. To the extent that the foregoing prohibition may be ineffective under Applicable Law, Developer shall provide not less than 10 days prior written notice (which notice shall contain the name and address of the secured party and the terms of such pledge, encumbrance, hypothecation or security interest) of any pledge, encumbrance, hypothecation or security interest in this Agreement.
- 7.3.3 Securities, partnership or other ownership interests in Developer may not be offered to the public under the Securities Act of 1933, as amended, nor may they be registered under the Securities Exchange Act of 1934, as amended, or any comparable federal, state or foreign law, rule or regulation. Such interests may be offered by private offering or otherwise only with the prior written consent of Company, which consent shall not be unreasonably withheld. All materials required for any such private offering by federal or state law shall be submitted to Company for a limited review as discussed below prior to being filed with any governmental agency; and any materials to be used in any exempt offering shall be submitted to Company for such review prior to their use. No such offering by Developer shall imply that Company is participating in an underwriting, issuance or offering of securities of Developer or Company, and Company's review of any offering materials shall be limited solely to the subject of the relationship between Franchise and Company and its Affiliates.
Source: Item 23 — RECEIPTS (FDD pages 54–260)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, a developer is restricted from offering securities, partnership, or other ownership interests to the public under the Securities Act of 1933 or registering them under the Securities Exchange Act of 1934, or any comparable law.
A developer can only offer these interests through a private offering or other means if they obtain prior written consent from Angry Chickz. This consent will not be unreasonably withheld. Before filing with any governmental agency, all materials required for any private offering by federal or state law must be submitted to Angry Chickz for a limited review. Similarly, any materials to be used in an exempt offering must be submitted for review before use.
Angry Chickz's review of offering materials is limited to the relationship between the franchise and Angry Chickz and its affiliates, and the offering cannot imply that Angry Chickz is participating in the underwriting, issuance, or offering of securities of the developer or Angry Chickz. For each proposed offering, the developer must pay Angry Chickz a nonrefundable fee of $10,000, in addition to any transfer fee under any Franchise Agreement, or a greater amount necessary to reimburse Angry Chickz for its reasonable costs and expenses associated with reviewing the proposed offering, including legal and accounting fees. The developer must also give Angry Chickz written notice at least thirty (30) days before starting any offering or transaction covered by this section.