What happens if an owner of 20% or more of an Angry Chickz franchise dies or becomes incapacitated?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee shall purport to make any Assignment without the prior written consent of Company; provided, however, on condition that the Franchised Business continues to be operated in conformity with this Agreement (a) upon prompt written request and upon the death or legal incapacity of a Franchisee who is an individual, Company shall allow up to 6 months after such death or legal incapacity for the heirs, personal representatives, or conservators (the "Heirs") of Franchisee either (i) assume this Agreement or at Company's discretion, execution Company's then current form of franchise agreement, if Company is subjectively satisfied that the Heirs meet the Standards, or (ii) if not so satisfied, to allow the Heirs to sell the Franchised Business to a person approved by Company, or (b) upon prompt written request and upon the death or legal incapacity of an Owner owning 20% or more of the Equity or voting power of a corporate or limited liability company Franchisee, or a general or limited partner owning 20% or more of any of the Partnership Rights of a Franchisee which is a Partnership, Company shall allow a period of up to 6 months after such death or legal incapacity for the Heirs to seek and obtain Company's consent to the transfer or Assignment of such stock, membership interests or Partnership Rights to the Heirs or to another person acceptable by Company.
If, within said 6 month period, the Heirs fail either to enter into a new franchise agreement or to sell the Franchised Business to a person approved by Company pursuant to this Agreement, or fail either to receive Company's consent to the Assignment of such Equity to the Heirs or to another person acceptable by Company, as provided in this Agreement, this Agreement shall thereupon automatically terminate;
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, if an owner holding 20% or more of the equity or voting power in a corporate or limited liability company franchise, or a partner owning 20% or more of the partnership rights in a partnership franchise, dies or becomes legally incapacitated, Angry Chickz allows the owner's heirs a period of up to 6 months to seek and obtain the company's consent to transfer or assign the stock, membership interests, or partnership rights to the heirs or another person acceptable to Angry Chickz.
If, within this 6-month period, the heirs fail to either receive Angry Chickz's consent to the assignment of equity to the heirs or to another person acceptable to the company, the Franchise Agreement will automatically terminate. This means that the heirs must actively seek approval from Angry Chickz to either take over the ownership stake themselves or find another suitable buyer for the stake within the specified timeframe.
This provision protects Angry Chickz by ensuring that the franchise continues to be operated by individuals or entities that meet their standards, even in the event of an owner's death or incapacity. It also provides a reasonable timeframe for the owner's heirs to sort out the ownership and management of the franchise, either by taking it over themselves or selling it to a qualified buyer. Prospective franchisees should consider this clause carefully, especially if their ownership structure involves multiple partners or shareholders, and have a succession plan in place to address such contingencies.