Does Item 4 of the Angry Chickz FDD disclose any pending bankruptcy cases?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
- Item 17, Additional Disclosures. The following statements are added to Item 17:
California Business and Professions Code Sections 20000 through 20043 provide rights to the franchisee concerning transfer, termination or non-renewal of a franchise. If the franchise agreement contains a provision that is inconsistent with the law, the law will control.
The franchise agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq.).
The franchise agreement contains a covenant not to compete which extends beyond the termination of the franchise. This provision may not be enforceable under California law.
Source: Item 4 — BANKRUPTCY (FDD page 10)
What This Means (2025 FDD)
Based on the 2025 Angry Chickz Franchise Disclosure Document addendum for the state of California, Item 17 includes additional disclosures that state, "The franchise agreement provides for termination upon bankruptcy. This provision may not be enforceable under federal bankruptcy law (11 U.S.C.A. Sec. 101 et seq.)." This statement indicates that while the franchise agreement may have a clause allowing termination upon bankruptcy, federal bankruptcy law might override that clause. This suggests that the franchisee's rights and the enforceability of the termination clause are subject to federal bankruptcy regulations.
However, the provided excerpts from the Angry Chickz FDD do not contain any information about pending bankruptcy cases involving the franchisor or its principals. Item 4 of the FDD typically covers the background and experience of the franchisor's executives and may include details about past bankruptcies, but the provided documents do not include this item.
A prospective Angry Chickz franchisee should review Item 4 of the complete FDD to ascertain whether any bankruptcy filings are disclosed. If the information is not present or unclear, it is advisable to directly ask the franchisor for clarification on any past or pending bankruptcy cases involving the company or its key personnel to fully understand the financial stability and potential risks associated with investing in the franchise.