For an Angry Chickz franchise, what is the effect of an assumption agreement on the original franchisee's obligations?
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, an assumption agreement does not relieve the original franchisee of their continuing obligations. Specifically, if a franchisee transfers their franchise to a new owner, the new owner may be required to sign an assumption agreement.
This agreement stipulates that the new owner will take on the responsibilities of the franchise agreement. However, even with this assumption agreement in place, the original franchisee remains responsible for any ongoing obligations. This means that if the new franchisee fails to meet certain requirements or defaults on payments, Angry Chickz can still hold the original franchisee accountable.
This condition protects Angry Chickz by ensuring that there is always a party responsible for upholding the franchise agreement. For a prospective franchisee, this highlights the importance of carefully selecting a buyer if they decide to sell their franchise, as they could still be liable for the new owner's actions. It is also important to note that Angry Chickz has the option to have the transferee execute a replacement franchise agreement, and may request a continuing guaranty from the transferor.