Can an Angry Chickz developer subfranchise, subcontract, sublicense, share, divide or partition the agreement?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
7.2 No Subfranchising by Developer.
- 7.2.1 Developer shall not offer, sell, or negotiate the sale of franchises to any third party, either in Developer's own name or in the name and/or on behalf of Company, or otherwise subfranchise, subcontract, sublicense, share, divide or partition this Agreement or any Franchise Agreement executed pursuant hereto, and nothing in this Agreement will be construed as granting Developer the right to do so. Developer shall not execute any Franchise Agreement with Company, or construct or equip any Restaurant with a view to offering or assigning such Franchise Agreement or Restaurant to any third party.
- 7.2.2 Notwithstanding Section 7.2.1, Developer may, with Company's prior written consent, execute and contemporaneously assign a Franchise Agreement executed pursuant hereto to a separate Entity controlled by Developer (each a "Subsidiary"); provided and on condition that:
- (a) Upon Company's request, Developer has delivered to Company a true, correct and complete copy of the Subsidiary's articles of incorporation or articles of organization, bylaws, operating agreement, partnership agreement, and other organizational documents, and Company has accepted the same;
- (b) The Subsidiary's articles of incorporation or articles of organization, bylaws, operating agreement, and partnership agreement, as applicable, shall provide that its activities are confined exclusively to operating Restaurant;
- (c) Developer, directly owns and controls not less than 100% of the Equity and voting rights of the Subsidiary;
- (d) the Subsidiary is in good standing in its jurisdiction of organization and each other jurisdiction where the conduct of its business or the operation of its properties requires it to be so qualified;
- (e) the person designated by Developer as the Operating Principal has exclusive day-to-day operational control over the Subsidiary;
Source: Item 23 — RECEIPTS (FDD pages 54–260)
What This Means (2025 FDD)
According to Angry Chickz's 2025 Franchise Disclosure Document, a developer is generally prohibited from subfranchising, subcontracting, or sharing their agreement. Specifically, the developer cannot offer or sell franchises to third parties, either in their own name or on behalf of Angry Chickz. They also cannot sublicense, divide, or partition the Area Development Agreement. This means a developer cannot delegate their development rights or allow another party to operate under their agreement.
However, there is an exception. With Angry Chickz's prior written consent, a developer can assign a Franchise Agreement to a separate entity, referred to as a Subsidiary, that they control. Several conditions must be met for this to be allowed.
First, Angry Chickz must receive and accept copies of the Subsidiary's organizational documents (articles of incorporation, bylaws, etc.). Second, the Subsidiary's activities must be limited exclusively to operating an Angry Chickz restaurant. Third, the developer must directly own and control at least 100% of the equity and voting rights of the Subsidiary. Fourth, the Subsidiary must be in good standing in its jurisdiction. Finally, the developer must designate an Operating Principal who has exclusive day-to-day operational control over the Subsidiary.
In summary, while Angry Chickz developers cannot typically subfranchise or transfer their agreements, they may assign a franchise agreement to a wholly-owned and controlled Subsidiary with Angry Chickz's approval and under specific conditions. This allows for flexibility in business structure while maintaining control and operational standards.