What is the 'Successor Agreement Right' for an Angry Chickz franchisee?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
nd shall expire on tenth (10th) anniversary of the Opening Date(the "Expiration Date"), unless sooner terminated or extended in accordance with this Agreement.
3.2 Right to Enter into Successor Franchise Agreement.
- 3.2.1 Subject to the conditions contained in Section 3.4 and Franchisee's compliance with Section 3.3, at the expiration of the Term hereof, Franchisee shall have the right (the "Successor Agreement Right") to enter into a new franchise agreement on the then-current form generally being offered to prospective franchisees of Company operating under the Marks (the "Successor Franchise Agreement") for two (2) successive five (5) year periods (each a "Successor Term"). Franchisee acknowledges that the terms of the Successor Franchise Agreement, including fees and royalties, will be substantially similar to new franchise agreements granted at the time and may materially differ from those contained in this Agreement.
- 3.2.2 The term of the Successor Franchise Agreement shall commence upon the date of expiration of the Term, or Successor Term, as applicable; provided, however, that notwithstanding the terms of Company's thencurrent form of franchise agreement:
- (a) The first Successor Franchise Agreement shall provide that Franchisee must pay, in lieu of an initial fee, a renewal fee in an amount equal to 25% of the then-current initial franchise fee charged by Company in the state where the Franchised Business is located, but not less than $12,500; and
- (b) the first Successor Franchise Agreement shall provide the right to enter into a successor franchise agreement as provided in the first Successor Franchise Agreement for one additional five (5) year term and that no further rights shall be granted to renew or enter into further successor franchise agreements.
- 3.3 Form and Manner of Exercising Successor Agreement Right. If available, the Successor Agreement Right shall be exercised only in the following manner:
- 3.3.1 Between 9 months and 12 months before the expiration of the Term, Franchisee shall notify Company in writing ("Notice of Election") that it intends to exercise its Successor Agreement Right. No sooner than immediately after the expiration of any waiting period(s) required by Applicable Law, and no more than 30 days after Franchisee receives Company's franchise disclosure document (if applicable), Franchisee sha
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to Angry Chickz's 2025 Franchise Disclosure Document, a franchisee has the option to enter into a new franchise agreement at the end of their initial term, which is referred to as the "Successor Agreement Right." This right allows the franchisee to operate under a new franchise agreement, which will be substantially similar to what Angry Chickz offers to new franchisees at that time, for two additional five-year periods (Successor Terms). The terms, including fees and royalties, in the new agreement may differ significantly from the original agreement.
To exercise this right, the Angry Chickz franchisee must notify the company in writing between 9 and 12 months before the end of the current term. After any legally required waiting period and within 30 days of receiving the franchise disclosure document from Angry Chickz (if applicable), the franchisee must sign and return the new Successor Franchise Agreement. If the franchisee fails to meet these deadlines or conditions, the Successor Agreement Right will lapse.
The first Successor Franchise Agreement requires the franchisee to pay a renewal fee instead of an initial fee. This renewal fee is 25% of the then-current initial franchise fee that Angry Chickz charges in the state where the franchised business is located, but it will not be less than $12,500. The first Successor Franchise Agreement will also grant the franchisee the right to enter into another successor franchise agreement for one additional five-year term, with no further renewal rights granted after that.