If a Chick Fil A franchisee assigns the Franchise Agreement, what agreement must be signed?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
Chick-fil-A may allow you to assign the Franchise Agreement to a single corporation, limited liability company or other form of business entity then approved by Chick-fil-A, which is formed solely for your convenience of ownership. Under the Assignment and Consent to Assignment Agreement that must be signed as a condition of any assignment, you must be the sole owner of the business entity ("Operator-Owner") and must agree to continue to be personally bound by, and personally liable for the breach of, each and every term and condition of the Franchise Agreement, including its attached Lease(s). Additionally, the Operator-Owner must guarantee the full and faithful performance by the proposed transferee business entity. The proposed transferee business entity must assume all of the obligations of the Operator-Owner as the original Operator under the Franchise Agreement, including its attached Lease(s). The form of Assignment and Consent to Assignment Agreement you and the business entity must sign to confirm your continuing obligations and the business entity's assumption of obligations to enable you to transfer your rights and obligations under the Franchise Agreement as franchisee to a business entity is attached to this Disclosure Document as Exhibit "B-1" for a corporation and Exhibit "B-2" for a limited liability company.
Source: Item 15 — Obligation to Participate in the Actual Operation of the Franchise Business (FDD pages 69–70)
What This Means (2025 FDD)
According to Chick Fil A's 2025 Franchise Disclosure Document, if a franchisee wishes to assign their Franchise Agreement to a business entity, they must sign an "Assignment and Consent to Assignment Agreement." This agreement is a condition of any assignment and ensures that the original franchisee, referred to as the "Operator-Owner," remains personally bound by and liable for any breaches of the Franchise Agreement, including its attached Lease(s).
This requirement means that even after assigning the agreement to a corporation, limited liability company, or other approved business entity, the Operator-Owner's personal guarantee remains in effect. The Operator-Owner must also guarantee the full and faithful performance by the proposed transferee business entity. The business entity taking over the agreement must assume all obligations of the original operator under the Franchise Agreement, including the attached Lease(s).
The specific form of the Assignment and Consent to Assignment Agreement varies depending on the type of business entity. Exhibit "B-1" of the Disclosure Document provides the form for a corporation, while Exhibit "B-2" provides the form for a limited liability company. This ensures that Chick Fil A maintains a consistent level of commitment and accountability, even when the franchise is operated through a business entity rather than directly by the individual franchisee.
This requirement is fairly common in franchising, as franchisors want to ensure that franchisees remain committed to the business even if they incorporate. By requiring a personal guarantee, Chick Fil A reduces its risk and ensures that the Operator-Owner has a vested interest in the success of the franchise.