If the assignee breaches the assignment agreement, what recourse does Chick Fil A have?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
5.2 Granting consent to the Assignment does not constitute approval of any member or officer of Assignee as an approved Operator or the Operator under the Franchise except as to the particular member that is a previous signatory to the Franchise in his or her individual capacity as the approved Operator thereunder and who is listed on Exhibit A attached to the Assignment and made a part of the Assignment. Assignor and Assignee agree that a breach of the Assignment shall constitute a breach of the Franchise and shall entitle Chick-fil-A to enforce all rights and remedies available to it including termination of the Franchise and the Assignment.
5.6 Assignor and Assignee agree that upon breach of any of the conditions, representations, agreements or warranties contained herein, they and each of them shall be subject, among all other remedies available by law or hereunder, to all relief and remedies granted to Chick-fil-A by the Franchise and the Assignment.
Source: Item 23 — Receipts (FDD pages 103–600)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, a breach of the assignment agreement by the assignee constitutes a breach of the franchise agreement itself. This gives Chick Fil A the right to enforce all available remedies, including terminating both the franchise and the assignment agreement. This provision ensures that Chick Fil A maintains control over its brand and operational standards even after a franchise has been assigned to a new operator.
Furthermore, the assignor (the original franchisee) remains liable for any breaches by the assignee. The assignor guarantees the assignee's performance of all obligations under the franchise agreement. This means that if the assignee fails to meet financial or operational requirements, Chick Fil A can seek recourse from the original franchisee as if they were still the operator. This provides an additional layer of security for Chick Fil A and incentivizes the assignor to ensure the assignee's compliance.
Chick Fil A also has the right to review the assignee's organizational documents to ensure they meet the company's current requirements. However, Chick Fil A's approval of the assignment does not constitute legal or tax advice, and the company has no obligation to ensure the validity of the assignee. This highlights the importance for both assignors and assignees to seek independent legal and financial counsel during the assignment process. Chick Fil A retains significant control and protection through these provisions, safeguarding its interests in the event of a breach.