Is an Angry Chickz Developer permitted to pledge or encumber the Development Agreement without consent?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
Source: Item 23 — RECEIPTS (FDD pages 54–260)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, an Angry Chickz Developer is not permitted to pledge or encumber the Development Agreement without prior written consent from Angry Chickz. Specifically, the FDD states that the Developer cannot directly or indirectly pledge, encumber, hypothecate, or grant any third party a security interest in the Development Agreement without Angry Chickz's express written consent.
However, the FDD also acknowledges that this prohibition might be ineffective under applicable law. In such cases, the Developer must provide Angry Chickz with at least 10 days' prior written notice before any such action. This notice must include the name and address of the secured party and the terms of the pledge, encumbrance, hypothecation, or security interest.
This requirement protects Angry Chickz by ensuring they maintain control over who has rights or interests in their Development Agreements. It allows them to assess any potential risks associated with a Developer's financial dealings and to ensure that the Development Agreement is not used in a way that could harm the Angry Chickz brand or system. For a prospective franchisee, this means they must seek approval from Angry Chickz before using the Development Agreement as collateral or security for any financial obligations.