In the event of liquidation of the Angry Chickz company, how are the net assets distributed to the Member?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's LLC operating agreement has a perpetual life. Excess cash flow, tax liability distributions, and profits and losses are to be distributed to the Member in accordance with the operating agreement. The liability of the Company's Member is limited to its specific capital balance. Upon liquidation of the Company, the net assets shall be distributed to the Member in accordance with the operating agreement.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, upon liquidation of Angry Chickz Franchising, LLC, the net assets will be distributed to the Member, Angry Chickz, Inc., in accordance with the operating agreement. The operating agreement dictates how excess cash flow, tax liability distributions, and profits and losses are allocated to the Member. The liability of the Member is limited to its specific capital balance.
This means that in the event Angry Chickz Franchising, LLC is liquidated, the distribution of assets to Angry Chickz, Inc. will be governed by the specifics detailed in their operating agreement, which is not further detailed in the FDD. The FDD does not specify the exact order or priority of payments to other potential creditors or parties before the Member receives its distribution.
As a prospective franchisee, it is important to understand the implications of this distribution structure. While the FDD outlines that net assets are distributed to the Member, it does not provide details on the specific procedures or priorities in the event of liquidation. Therefore, it would be prudent to request a copy of the operating agreement and consult with a legal and financial advisor to fully understand the distribution process and potential risks associated with the franchise.