Chicken_Guy 2025 Franchise FAQ - FDD Ninja

Question 1

In 2024, how many Chicken Guy outlets ceased operations for 'other reasons'?

Accepted Answer

|  |  | Outle |  |  |  |  |  |  |
|---|---|---|---|---|---|---|---|---|
|  |  | ts at | Outlets |  | Non- | Reacquired by | Ceased Operations | Outlets at |
| State | Year | Start of Year | Opened | Terminations | Renewals | Franchisor | Other Reasons | End of the Year |
|  |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| CA | 2023 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 2 | 0 | 0 | 0 | 0 | 3 |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| MI | 2023 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 1 | 1 | 0 | 0 | 0 | 1 |
|  | 2022 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
| NJ | 2023 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 1 | 0 | 0 | 0 | 0 | 2 |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| NV | 2023 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2022 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
| PA | 2023 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 1 | 1 | 0 | 0 | 0 | 1 |
|  | 2022 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
| TN | 2023 | 2 | 0 | 1 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 0 | 1 | 0 | 0 | 0 | 0 |
|  | 2022 | 2 | 2 | 0 | 0 | 0 | 0 | 4 |
| Total | 2023 | 4 | 3 | 1 | 0 | 0 | 0 | 6 |
|  | 2024 | 6 | 5 | 3 | 0 | 0 | 0 | 8 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 47–50)

Question 2

What conditions must be met for a release or waiver of rights to be valid for a Chicken Guy franchise?

Accepted Answer

s contain liquidated damages clauses. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.

You must sign a general release upon execution of the franchise and development agreements, if you transfer the rights granted under those agreements and if you renew your franchise under the franchise agreement. These provisions may not be enforceable under California law. California Corporations Code Section 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code Sections 31000 through 31516). Business and Professions Code Section 21000 voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code Sections 20000 through 20043).

To obtain a liquor license in California, you must apply in-person with the State of California Department of Alcoholic Beverage Control, at your district office ("Department"). The Department will conduct an investigation, and you are responsible for posting a public notice and furnishing any additional notices or information requested by the Department. An application for a liquor license in California can take from 55 to 175 days *or more* to be approved, depending on the circumstances. For more information, please visit https://www.abc.ca.gov/ or call the Department at 916.419.2500.

#### **5. Item 22, Additional Disclosure**. The following statements are added to Item 22:

No statement, questionnaire, or acknowledgement signed or agreed to by you in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by us, any franchise seller, or any other person acting on our behalf. This provision supersedes any other term of any document executed in connection with the franchise.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 3

What is the extent of Guy Fieri's involvement in the Chicken Guy! franchise system?

Accepted Answer

In this disclosure document, Chicken Guy is offering the opportunity to become a franchisee to develop and operate Chicken Guy! Restaurants. The Chicken Guy! Restaurant concept derives its name from chef and TV personality Guy Fieri. Chicken Guy! Restaurants are fast casual restaurants featuring all-natural anti-biotic free chicken tenders, which are hand-breaded, marinated in pickle brine and buttermilk, infused with flavorful herbs, and served with a myriad of signature sauces. Chicken Guy! Restaurants also offer loaded fries, mac and cheese, pickle chips, American slaw, dessert items, and an array of beverages, including shakes. Chicken Guy! Restaurants may also offer alcoholic beverages, catering and delivery services to businesses and individuals in their neighborhood, and drive-thru service.

Source: Item 18 — PUBLIC FIGURES (FDD page 46)

Question 4

What is Guy Fieri's role in the Chicken Guy! franchise system?

Accepted Answer

In this disclosure document, Chicken Guy is offering the opportunity to become a franchisee to develop and operate Chicken Guy! Restaurants. The Chicken Guy! Restaurant concept derives its name from chef and TV personality Guy Fieri. Chicken Guy! Restaurants are fast casual restaurants featuring all-natural anti-biotic free chicken tenders, which are hand-breaded, marinated in pickle brine and buttermilk, infused with flavorful herbs, and served with a myriad of signature sauces.

Source: Item 18 — PUBLIC FIGURES (FDD page 46)

Question 5

What are the limitations on transfer fees for a Chicken Guy franchise?

Accepted Answer

has posted a surety bond in the amount of \$50,000. The bond is on file with the Department of Financial Protection and Innovation.

**4. Item 17, Additional Disclosures**. The following statements are added to Item 17:

California Business and Professions Code Sections 20000 through 20043 provide rights to you concerning transfer, termination or non-renewal of the franchise and development agreements. If the agreements contain a provision that is inconsistent with the law, the law will control.

The franchise and development agreements provide for termination upon bankruptcy. These provisions may not be enforceable under federal bankruptcy law (11 U.S.C.A. § 101, *et seq.).*

The franchise and development agreements provide for application of the laws of Florida. This provision may not be enforceable under California law.

The franchise and development agreements contain a choice of forum provision. This provision may not be enforceable under California law.

The franchise and development agreements contain a covenant not to compete that extends beyond the termination of the franchise. These provisions may not be enforceable under California law.

The franchise and development agreements contain liquidated damages clauses. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.

You must sign a general release upon execution of the franchise and development agreements, if you transfer the rights granted under those agreements and if you renew your franchise under the franchise agreement. These provisions may not be enforceable under California law. California Corporations Code Section 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code Sections 31000 through 31516). Business and Professions Code Section 21000 voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code Sections 20000 through 20043).

To obtain a liquor license in California, you must apply in-person with the State of California Department of Alcoholic Beverage Control, at your district office ("Department").

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 6

How many Chicken Guy outlets were reacquired by the franchisor in 2024?

Accepted Answer

|  |  | Outlets |  | Reacquired | Outlets Closed |  | Outlets at |
|---|---|---|---|---|---|---|---|
|  |  |  | Outlets |  |  | Outlets Sold to |  |
| State | Year | at Start of Year | Opened | from Franchisees |  | Franchisees | End of the Year |
|  |  |  |  |  |  |  |  |
|  | 2022 | 3 | 0 | 0 | 1 | 0 | 2 |
| FL | 2023 | 2 | 1 | 0 | 0 | 0 | 3 |
|  | 2024 | 3 | 0 | 0 | 0 | 0 | 3 |
|  | 2022 | 3 | 0 | 0 | 1 | 0 | 2 |
| Total | 2023 | 2 | 1 | 0 | 0 | 0 | 3 |
|  | 2024 | 3 | 0 | 0 | 0 | 0 | 3 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 47–50)

Question 7

What is the relationship between Guy Fieri and Chicken Guy!?

Accepted Answer

As noted in Item 1, the Chicken Guy! Restaurant concept derives its name from chef and TV personality Guy Fieri. Mr. Fieri owns GRF Enterprises, LLC, which is a manager of and owns a 50% interest in our parent company, Chicken Concept, LLC. Mr. Fieri will receive a financial benefit from his indirect ownership interest in Chicken Concept, LLC. Mr. Fieri participates in developing and improving the System and promoting the System to the public and our prospective franchisees.

Source: Item 18 — PUBLIC FIGURES (FDD page 46)

Question 8

What restrictions exist on limiting the statute of limitations for claims related to a Chicken Guy franchise in Washington?

Accepted Answer

As a result, any such provisions contained in the franchise agreement or elsewhere are void and unenforceable in Washington.

- 16. **Questionnaires and Acknowledgments.** No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor.

This provision supersedes any other term of any document executed in connection with the franchise.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 9

What are the specific activities Guy Fieri undertakes to support the Chicken Guy! franchise?

Accepted Answer

In this disclosure document, Chicken Guy is offering the opportunity to become a franchisee to develop and operate Chicken Guy! Restaurants. The Chicken Guy! Restaurant concept derives its name from chef and TV personality Guy Fieri. Chicken Guy! Restaurants are fast casual restaurants featuring all-natural anti-biotic free chicken tenders, which are hand-breaded, marinated in pickle brine and buttermilk, infused with flavorful herbs, and served with a myriad of signature sauces. Chicken Guy! Restaurants also offer loaded fries, mac and cheese, pickle chips, American slaw, dessert items, and an array of beverages, including shakes. Chicken Guy! Restaurants may also offer alcoholic beverages, catering and delivery services to businesses and individuals in their neighborhood, and drive-thru service.

Source: Item 18 — PUBLIC FIGURES (FDD page 46)

Question 10

What was the total number of Chicken Guy outlets at the end of 2023?

Accepted Answer

| Restaurant Type | Year | Restaurants at Start of Year | Restaurants at End of Year | Net Change |
|---|---|---|---|---| 
| Franchised | 2022 | 2 | 4 | +2 |
|  | 2023 | 4 | 6 | +2 |
|  | 2024 | 6 | 8 | +2 |
| Company Operated | 2022 | 3 | 2 | -1 |
|  | 2023 | 2 | 3 | +1 |
|  | 2024 | 3 | 3 | 0 |
| Total Restaurants | 2022 | 5 | 6 | +1 |
|  | 2023 | 6 | 9 | +3 |
|  | 2024 | 9 | 11 | +2 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 47–50)

Question 11

What was the total number of Chicken Guy outlets opened across all states in 2023?

Accepted Answer

|  |  | Outle |  |  |  |  |  |  |
|---|---|---|---|---|---|---|---|---|
|  |  | ts at | Outlets |  | Non- | Reacquired by | Ceased Operations | Outlets at |
| State | Year | Start of Year | Opened | Terminations | Renewals | Franchisor | Other Reasons | End of the Year |
|  |  |  |  |  |  |  |  |  |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| CA | 2023 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 2 | 0 | 0 | 0 | 0 | 3 |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| MI | 2023 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 1 | 1 | 0 | 0 | 0 | 1 |
|  | 2022 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
| NJ | 2023 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 1 | 0 | 0 | 0 | 0 | 2 |
|  | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| NV | 2023 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2022 | 0 | 1 | 0 | 0 | 0 | 0 | 1 |
| PA | 2023 | 1 | 0 | 0 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 1 | 1 | 0 | 0 | 0 | 1 |
|  | 2022 | 2 | 0 | 0 | 0 | 0 | 0 | 2 |
| TN | 2023 | 2 | 0 | 1 | 0 | 0 | 0 | 1 |
|  | 2024 | 1 | 0 | 1 | 0 | 0 | 0 | 0 |
|  | 2022 | 2 | 2 | 0 | 0 | 0 | 0 | 4 |
| Total | 2023 | 4 | 3 | 1 | 0 | 0 | 0 | 6 |
|  | 2024 | 6 | 5 | 3 | 0 | 0 | 0 | 8 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 47–50)

Question 12

Under what conditions can Chicken Guy repurchase a franchisee's business?

Accepted Answer

- (h) A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor.

This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to purchase the assets of a franchisee on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right to acquire the assets of a franchisee for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c).

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 13

Besides California, which other states require state-specific addenda to the Chicken Guy agreements according to Exhibit K?

Accepted Answer

#### **EXHIBIT K**

#### **STATE SPECIFIC ADDENDA TO THE AGREEMENTS**

**California Illinois Maryland Minnesota New York North Dakota Rhode Island South Dakota Washington**

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 14

What other brands, besides Chicken Guy, are included in the Earl Enterprises group of restaurants?

Accepted Answer

Since October 1991, Mr. Earl has served as the founder and chairman of the Earl Enterprises® group of restaurants, which includes brands such as Chicken Guy!, Planet Hollywood, Bertucci's, EOS, Brio Italian Grille, Bravo Italian Kitchen, Seaside on the Pier, Café Hollywood, Breakfast Club, Rock & Reilly's, and Asian Street Eats (and which previously included brands such as Mixology101, Buca di Beppo, TooJay's, and Tequila Taqueria between August 2019 and August 2024) collectively, the "Earl Enterprises Companies" in Orlando, Florida.

Source: Item 2 — BUSINESS EXPERIENCE (FDD pages 8–9)

Question 15

How does the cost of software licenses and updates for a Chicken Guy franchise (Item 6) compare to the initial franchise fee (Item 5)?

Accepted Answer

| TYPE OF FEE(1) | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| Software Licenses and Updates | Actual cost of license fee and updates | As incurred | You must purchase and use any new or upgraded proprietary software programs, system documentation manuals and other proprietary materials that we may develop or designate for use in the System in the future. |

Question 16

How does the cost of taxes that a Chicken Guy franchisee must reimburse (Item 6) compare to the estimated costs for initial advertising in the initial investment (Item 7)?

Accepted Answer

If any taxes, fees or assessments are imposed on Chicken Guy by reason of its acting as franchisor or licensing the Proprietary Marks under this Agreement, Franchisee shall reimburse Chicken Guy for the amount of those taxes, fees or assessments within 30 days after receipt of an invoice from Chicken Guy.

| Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid |
|---|---|---|---|---|---|
| Grand Opening | $10,000 | $5,000 | Progress | As | Vendors |
| Required Spending (5) |  |  | payments | incurred |  |

Question 17

What is the difference in the initial franchise fee for a Chicken Guy restaurant as stated in Item 5 and Item 7?

Accepted Answer

STIMATED INITIAL INVESTMENT FRANCHISE AGREEMENT

| Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid |
|---|---|---|---|---|---|
| Deposit Fee(4) | $0 - $5,000 | $0 - $5,000 | Lump sum | See Item 5 | Chicken Guy |
| Initial Franchise Fee | $50,000 | $40,000 - $50,000 | Lump sum | See Item | Chicken |
| (4) |  |  |  | 5 | Guy |
| Grand Opening | $10,000 | $5,000 | Progress | As | Vendors |
| Required Spending (5) |  |  | payments | incurred |  |
| Leasehold Costs and Building and Site Improvements (6) | $350,000 - $1,900,000 | $350,000 - $1,200,000 | Progress payments | As arranged | Contractor, Architect |
| Furnishings, Fixtures | $195,000 - $600,000 | $195,000 - $600,000 | As | As | Vendors |
| and Equipment (7) |  |  | arranged | incurred |  |
| Signage (8) | $20,000 - $95,000 | $15,000 - $95,000 | As arranged | As incurred | Vendors |
| Point of Sale | $4.500 - $25,000 | $4,500 - $25,000 | As | As | Vendors |
| System (9) |  |  | arranged | incurred |  |
| Technology (10) | $15,000 - $30,000 | $15,000 - $25,0

Question 18

How does the estimated cost of the initial franchise fee for Chicken Guy (Item 7) compare to the potential ongoing costs of taxes and fees (Item 6)?

Accepted Answer

| Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid |
|---|---|---|---|---|---|
| Deposit Fee(4) | $0 - $5,000 | $0 - $5,000 | Lump sum | See Item 5 | Chicken Guy |
| Initial Franchise Fee | $50,000 | $40,000 - $50,000 | Lump sum | See Item | Chicken |
| (4) |  |  |  | 5 | Guy |
| Grand Opening | $10,000 | $5,000 | Progress | As | Vendors |
| Required Spending (5) |  |  | payments | incurred |  |
| Leasehold Costs and Building and Site Improvements (6) | $350,000 - $1,900,000 | $350,000 - $1,200,000 | Progress payments | As arranged | Contractor, Architect |
| Furnishings, Fixtures | $195,000 - $600,000 | $195,000 - $600,000 | As | As | Vendors |
| and Equipment (7) |  |  | arranged | incurred |  |
| Signage (8) | $20,000 - $95,000 | $15,000 - $95,000 | As arranged | As incurred | Vendors |
| Point of Sale | $4.500 - $25,000 | $4,500 - $25,000 | As | As | Vendors |
| System (9) |  |  | arranged | incurred |  |
| Technology (10) | $15,000 - $30,000 | $15,000 - $25,000 | As arranged | As incurred | Vendors |
| Graphic Items (11) | $30,000 - $60,000 | $20,000 - $60,000 | As arranged | As incurred | Vendors |
| Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid |
| Professional Fees (12) | $10,000 - $20,000 | $10,000 - $20,000 | Before opening | As incurred | Attorney, accountant, and other business advisors |
| Initial Manager | $15,000 - $25,000 | $15,000 - $25,000 | As | As | Third |
| Training (13) |  |  | arranged | incurred | parties |
| Pre-Opening Costs | $15,000 - $50,000 | $15,000 - $50,000 | As | As | Vendors |
| (14) |  |  | arranged | incurred |  |
| Additional Funds – | $50,000 - $150,000 | $50,000 - $150,000 | As | As | Vendors |
| 3 months (16) |  |  | arranged | incurred |  |
| TOTAL ESTIMATED INITIAL INVESTMENT (17) | $764,500 - $3,020,000 | $734,000 - $2,310,000 | (Estimate does not include the cost to obtain an alcoholic beverage license which you may choose to incur. See Note 15 below.) |  |  |

Question 19

How does the estimated cost of the initial franchise fee for Chicken Guy (Item 7) relate to the potential ongoing costs of software licenses and updates (Item 6)?

Accepted Answer

| Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid |
|---|---|---|---|---|---|
| Deposit Fee(4) | $0 - $5,000 | $0 - $5,000 | Lump sum | See Item 5 | Chicken Guy |
| Initial Franchise Fee | $50,000 | $40,000 - $50,000 | Lump sum | See Item | Chicken |
| (4) |  |  |  | 5 | Guy |
| Grand Opening | $10,000 | $5,000 | Progress | As | Vendors |
| Required Spending (5) |  |  | payments | incurred |  |
| Leasehold Costs and Building and Site Improvements (6) | $350,000 - $1,900,000 | $350,000 - $1,200,000 | Progress payments | As arranged | Contractor, Architect |
| Furnishings, Fixtures | $195,000 - $600,000 | $195,000 - $600,000 | As | As | Vendors |
| and Equipment (7) |  |  | arranged | incurred |  |
| Signage (8) | $20,000 - $95,000 | $15,000 - $95,000 | As arranged | As incurred | Vendors |
| Point of Sale | $4.500 - $25,000 | $4,500 - $25,000 | As | As | Vendors |
| System (9) |  |  | arranged | incurred |  |
| Technology (10) | $15,000 - $30,000 | $15,000 - $25,000 | As arranged | As incurred | Vendors |
| Graphic Items (11) | $30,000 - $60,000 | $20,000 - $60,000 | As arranged | As incurred | Vendors |
| Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid |
| Professional Fees (12) | $10,000 - $20,000 | $10,000 - $20,000 | Before opening | As incurred | Attorney, accountant, and other business advisors |
| Initial Manager | $15,000 - $25,000 | $15,000 - $25,000 | As | As | Third |
| Training (13) |  |  | arranged | incurred | parties |
| Pre-Opening Costs | $15,000 - $50,000 | $15,000 - $50,000 | As | As | Vendors |
| (14) |  |  | arranged | incurred |  |
| Additional Funds – | $50,000 - $150,000 | $50,000 - $150,000 | As | As | Vendors |
| 3 months (16) |  |  | arranged | incurred |  |
| TOTAL ESTIMATED INITIAL INVESTMENT (17) | $764,500 - $3,020,000 | $734,000 - $2,310,000 | (Estimate does not include the cost to obtain an alcoholic beverage license which you may choose to incur. See Note 15 below.) |  |  |

Question 20

How does the estimated cost of the initial franchise fee for Chicken Guy (Item 7) relate to the potential ongoing costs of software licenses and updates (Item 6) and taxes (Item 6)?

Accepted Answer

STIMATED INITIAL INVESTMENT FRANCHISE AGREEMENT | Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid | |---|---|---|---|---|---| | Deposit Fee(4) | $0 - $5,000 | $0 - $5,000 | Lump sum | See Item 5 | Chicken Guy | | Initial Franchise Fee | $50,000 | $40,000 - $50,000 | Lump sum | See Item | Chicken | | (4) | | | | 5 | Guy | | Grand Opening | $10,000 | $5,000 | Progress | As | Vendors | | Required Spending (5) | | | payments | incurred | | | Leasehold Costs and Building and Site Improvements (6) | $350,000 - $1,900,000 | $350,000 - $1,200,000 | Progress payments | As arranged | Contractor, Architect | | Furnishings, Fixtures | $195,000 - $600,000 | $195,000 - $600,000 | As | As | Vendors | | and Equipment (7) | | | arranged | incurred | | | Signage (8) | $20,000 - $95,000 | $15,000 - $95,000 | As arranged | As incurred | Vendors | | Point of Sale | $4.500 - $25,000 | $4,500 - $25,000 | As | As | Vendors | | System (9) | | | arranged | incurred | | | Technology (10) | $15,000 - $30,000 | $15,000 - $25,000 | As arranged | As incurred | Vendors | | Graphic Items (11) | $30,000 - $60,000 | $20,000 - $60,000 | As arranged | As incurred | Vendors | | Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid | | Professional Fees (12) | $10,000 - $20,000 | $10,000 - $20,000 | Before opening | As incurred | Attorney, accountant, and other business advisors | | Initial Manager | $15,000 - $25,000 | $15,000 - $25,000 | As | As | Third | | Training (13) | | | arranged | incurred | parties | | Pre-Opening Costs | $15,000 - $50,000 | $15,000 - $50,000 | As | As | Vendors | | (14) | | | arranged | incurred | | | Additional Funds – | $50,000 - $150,000 | $50,000 - $150,000 | As | As | Vendors | | 3 months (16) | | | arranged | incurred | | | TOTAL ESTIMATED INITIAL INVESTMENT (17) | $764,500 - $3,020,000 | $734,000 - $2,310,000 | (Estimate does not include the cost to obtain an alcoholic beverage license which you may choose to incur. See Note 15 below.) | | |# TABLE NO. 2 ESTIMATED INITIAL INVESTMENT DEVELOPMENT AGREEMENT – THREE TO FIVE RESTAURANTS | Type of Expenditure | Amount Low Estimate | Amount High Estimate | Method of Payment1 | When Due | To whom payment is to be made | |---|---|---|---|---|---| | Development Fee (18) | $120,000 | $200,000 | Lump sum | Upon signing Development Agreement | Us | | Business Plan | $3,000 | $5,000 | As incurred | As incurred | Third parties | | Preparation, Legal Fees | | | | | | | & Miscellaneous | | | | | | | Expenses (19) | | | | | | | Total | $123,000 | $205,000 | | | |#### **NOTES** - 1. Traditional Restaurants. Chicken Guy! Restaurants may be developed as in-line, end cap, free-standing, or drive-thru locations.

Question 21

What are all the fees a Chicken Guy franchisee might pay to the franchisor, considering both the initial fees (Item 5) and other fees (Item 6)?

Accepted Answer

d to be disclosed in this Item.

#### **ITEM 5 INITIAL FEES**

#### **Development Agreement**

You must pay a Development Fee in the amount of \$50,000 for each Franchised Restaurant that you agree to develop when you sign the Development Agreement. If you sign a Development Agreement to develop three or more Franchised Restaurants, we will reduce the Development Fee to \$40,000 for each Franchised Restaurant. The Development Fee is typically paid in one lump sum; however, in certain circumstances we may permit developers to pay the Development Fee in installments.

The Development Fee is not refundable, but will be credited against the Initial Franchise Fee, which is payable to us under each Franchise Agreement that you sign under the Development Agreement. The aggregate amount of the Initial Franchise Fee credits that we provide for the Franchise Agreements you sign will not exceed the amount of the Development Fee that you paid when you signed the Development Agreement. You must agree to develop at least one Chicken Guy! Restaurant under the Development Agreement.

#### **Franchise Agreement**

When you sign the Franchise Agreement, you shall pay an Initial Franchise Fee in the amount of \$50,000. The Initial Franchise Fee is fully earned by us when paid and is not refundable.

If you sign a Franchise Agreement pursuant to a Development Agreement, where you agreed to develop three or more Chicken Guy! Restaurants, we will reduce the Initial Franchise Fee to \$40,000. The specific amount of the Initial Franchise Fee that you will owe under each Franchise Agreement will be specified in the Development Agreement.

If you open a Chicken Guy! Restaurant within a Walmart store, you will sign the Nontraditional Location Addendum to the Franchise Agreement and you will pay a reduced Initial Franchise Fee of \$40,000.

#### **Deposit Fee**

When we approve your application to become a Chicken Guy! Restaurant franchisee, and prior to our preparation of your Franchise Agreement or Development Agreement, you will sign the Agreement Request Form attached as Exhibit C and pay a Deposit Fee in the amount of \$5,000. The Deposit Fee is not refundable, but if you sign a Franchise Agreement or Development Agreement within 10 business days of receiving the agreement for signature, Chicken Guy shall apply the Deposit Fee toward payment of the Development Fee required under the Development Agreement or the Initial Franchise Fee required under the Franchise Agreement, as applicable.

#### **Veterans Discount**

Under our veterans program, if you (or a holder of at least a 51% ownership interest in your franchisee entity) provide us with a DD Form 214 or other adequate documentation, as determined by us, demonstrating honorable discharge from the United States military and you sign a Franchise Agreement to develop and operate a new Franchised Restaurant, then we will reduce your Initial Franchise Fee due under the Franchise Agreement by \$5,000. You will sign a Veterans Addendum to the Franchise Agreement, a copy of which is attached as Exhibit I. If, prior to the first anniversary of the opening date of the Franchised Restaurant, (1) you transfer the Franchised Restaurant, or (2) we terminate the Franchise Agreement, you must pay us the \$5,000 that we waived under the veterans program.

#### **Team Member Training**

If you postpone or delay team member training based on your failure to obtain a certificate of occupancy or for any other reason, you must reimburse us for any additional costs and expenses, including the salaries and wages for our trainers during the period of such delay. If the Franchised Restaurant is not your first Chicken Guy! Restaurant and if you request that we conduct the team member training for nonmanagement staff, you must upon receipt of an invoice from us pay all reasonable expenses incurred by us in connection with such on-site training, including without limitation, travel expenses, lodging accommodations and other reasonable expenses of all such persons sent to the Franchised Restaurant in connection with the on-site training of the Franchised Restaurant employees. These expenses will range from \$3,000 to \$8,000 per week (for one to two trainers).

\* \* \*

The Deposit Fee, Development Fee, and Initial Franchise Fee are typically uniform for all franchisees. However, in our last fiscal year, we reduced the Initial Franchise Fee to \$25,000 for one franchisee and waived the Initial Franchise Fee for another franchisee.

#### **ITEM 6 OTHER FEES**

| TYPE OF FEE(1) | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| Software Licenses and Updates | Actual cost of license fee and updates | As incurred | You must purchase and use any new or upgraded proprietary software programs, system documentation manuals and other proprietary materials that we may develop or designate for use in the System in the future. |
| Taxes | Our expenses | Within 30 days of receipt of invoice | You must reimburse us for any taxes, fees or assessments imposed on us for acting as franchisor or licensing the Proprietary Marks. |
| Transfer | $10,000 | Prior to consummation of transfer | We have the right to approve all transfers. There is no fee if you transfer an agreement to a corporation or limited liability company that your owners control. |
| Website Fee | $0 - $1,000 | As incurred | Although we do not currently do so, in the future we may charge you a fee for developing, reviewing and approving your website and/or for hosting the website. |
| Early Termination Damages | Amount of the average weekly Royalty Fees that you owed for the one year period prior to termination, multiplied by the lesser of 104 weeks or the number of weeks remaining in the term of the Franchise Agreement | Within 30 days following the termination | Payable if you default on your obligations and we terminate the Franchise Agreement prior to the expiration of the Initial Term.

Question 22

How does the initial franchise fee for a Chicken Guy in-line restaurant (Item 7) compare to the development fee for each restaurant under a Development Agreement (Item 5) and the potential ongoing costs of software licenses and updates (Item 6)?

Accepted Answer

STIMATED INITIAL INVESTMENT FRANCHISE AGREEMENT | Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid | |---|---|---|---|---|---| | Deposit Fee(4) | $0 - $5,000 | $0 - $5,000 | Lump sum | See Item 5 | Chicken Guy | | Initial Franchise Fee | $50,000 | $40,000 - $50,000 | Lump sum | See Item | Chicken | | (4) | | | | 5 | Guy | | Grand Opening | $10,000 | $5,000 | Progress | As | Vendors | | Required Spending (5) | | | payments | incurred | | | Leasehold Costs and Building and Site Improvements (6) | $350,000 - $1,900,000 | $350,000 - $1,200,000 | Progress payments | As arranged | Contractor, Architect | | Furnishings, Fixtures | $195,000 - $600,000 | $195,000 - $600,000 | As | As | Vendors | | and Equipment (7) | | | arranged | incurred | | | Signage (8) | $20,000 - $95,000 | $15,000 - $95,000 | As arranged | As incurred | Vendors | | Point of Sale | $4.500 - $25,000 | $4,500 - $25,000 | As | As | Vendors | | System (9) | | | arranged | incurred | | | Technology (10) | $15,000 - $30,000 | $15,000 - $25,000 | As arranged | As incurred | Vendors | | Graphic Items (11) | $30,000 - $60,000 | $20,000 - $60,000 | As arranged | As incurred | Vendors | | Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid | | Professional Fees (12) | $10,000 - $20,000 | $10,000 - $20,000 | Before opening | As incurred | Attorney, accountant, and other business advisors | | Initial Manager | $15,000 - $25,000 | $15,000 - $25,000 | As | As | Third | | Training (13) | | | arranged | incurred | parties | | Pre-Opening Costs | $15,000 - $50,000 | $15,000 - $50,000 | As | As | Vendors | | (14) | | | arranged | incurred | | | Additional Funds – | $50,000 - $150,000 | $50,000 - $150,000 | As | As | Vendors | | 3 months (16) | | | arranged | incurred | | | TOTAL ESTIMATED INITIAL INVESTMENT (17) | $764,500 - $3,020,000 | $734,000 - $2,310,000 | (Estimate does not include the cost to obtain an alcoholic beverage license which you may choose to incur. See Note 15 below.) | | |# TABLE NO. 2 ESTIMATED INITIAL INVESTMENT DEVELOPMENT AGREEMENT – THREE TO FIVE RESTAURANTS | Type of Expenditure | Amount Low Estimate | Amount High Estimate | Method of Payment1 | When Due | To whom payment is to be made | |---|---|---|---|---|---| | Development Fee (18) | $120,000 | $200,000 | Lump sum | Upon signing Development Agreement | Us | | Business Plan | $3,000 | $5,000 | As incurred | As incurred | Third parties | | Preparation, Legal Fees | | | | | | | & Miscellaneous | | | | | | | Expenses (19) | | | | | | | Total | $123,000 | $205,000 | | | |#### **NOTES** - 1. Traditional Restaurants. Chicken Guy! Restaurants may be developed as in-line, end cap, free-standing, or drive-thru locations. The figures in the table reflect the estimated initial investment for a Chicken Guy! Restaurant located at an in-line or end cap location based on our affiliates' experience in developing restaurants. The estimated investment for inline and endcap locations will range towards the low end of the estimate in the table above while drive-thru locations will range toward the high end of the estimated initial investment in the table above. If you plan to develop a Chicken Guy! Restaurant in a free-standing location, the real estate, building and site improvement costs are likely to be significantly higher than what is included in this Item 7. - 2.

Question 23

How does the initial franchise fee for a Chicken Guy in-line restaurant (Item 7) compare to the development fee for each restaurant under a Development Agreement (Item 5), the potential ongoing costs of software licenses and updates (Item 6), and the estimated costs for equipment and supplies (Item 7)?

Accepted Answer

| Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid |
|---|---|---|---|---|---|
| Deposit Fee(4) | $0 - $5,000 | $0 - $5,000 | Lump sum | See Item 5 | Chicken Guy |
| Initial Franchise Fee | $50,000 | $40,000 - $50,000 | Lump sum | See Item | Chicken |
| (4) |  |  |  | 5 | Guy |
| Furnishings, Fixtures | $195,000 - $600,000 | $195,000 - $600,000 | As | As | Vendors |
| and Equipment (7) |  |  | arranged | incurred |  |

#### **ITEM 5 INITIAL FEES**

#### **Development Agreement**

You must pay a Development Fee in the amount of $50,000 for each Franchised Restaurant that you agree to develop when you sign the Development Agreement. If you sign a Development Agreement to develop three or more Franchised Restaurants, we will reduce the Development Fee to $40,000 for each Franchised Restaurant. The Development Fee is typically paid in one lump sum; however, in certain circumstances we may permit developers to pay the Development Fee in installments.

The Development Fee is not refundable, but will be credited against the Initial Franchise Fee, which is payable to us under each Franchise Agreement that you sign under the Development Agreement. The aggregate amount of the Initial Franchise Fee credits that we provide for the Franchise Agreements you sign will not exceed the amount of the Development Fee that you paid when you signed the Development Agreement. You must agree to develop at least one Chicken Guy! Restaurant under the Development Agreement.

#### **Franchise Agreement**

When you sign the Franchise Agreement, you shall pay an Initial Franchise Fee in the amount of $50,000. The Initial Franchise Fee is fully earned by us when paid and is not refundable.

If you sign a Franchise Agreement pursuant to a Development Agreement, where you agreed to develop three or more Chicken Guy! Restaurants, we will reduce the Initial Franchise Fee to $40,000. The specific amount of the Initial Franchise Fee that you will owe under each Franchise Agreement will be specified in the Development Agreement.

If you open a Chicken Guy! Restaurant within a Walmart store, you will sign the Nontraditional Location Addendum to the Franchise Agreement and you will pay a reduced Initial Franchise Fee of $40,000.

- **(3)** Franchisee shall: **(a)** use any proprietary software programs, system documentation manuals and other proprietary materials provided to Franchisee by Chicken Guy in connection with the operation of the Franchised Restaurant; **(b)** input and maintain in Franchisee's technology system such data and information as Chicken Guy prescribes in the Manual, software programs, documentation or otherwise; and **(c)** purchase new or upgraded software programs, system documentation manuals and other proprietary materials at then-current prices (including ongoing software licensing fees) within 90 days after receipt of notice from Chicken Guy that Chicken Guy has adopted such new or upgraded programs, manuals and materials system-wide.

- 1. Initial Franchise Fee Reduction. Notwithstanding the provisions of the Data Sheet and Section 7.A.(2) of the Franchise Agreement, Franchisee shall receive a $5,000 discount and pay a reduced Initial Franchise Fee to Chicken Guy in the amount of $45,000.

Question 24

How does the initial franchise fee for a Chicken Guy in-line restaurant (Item 7) compare to the development fee for each restaurant under a Development Agreement (Item 5), the potential ongoing costs of software licenses and updates (Item 6), the estimated costs for equipment and supplies (Item 7), and the costs associated with site selection and acquisition/lease (Item 9)?

Accepted Answer

STIMATED INITIAL INVESTMENT FRANCHISE AGREEMENT

| Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid |
|---|---|---|---|---|---|
| Deposit Fee(4) | $0 - $5,000 | $0 - $5,000 | Lump sum | See Item 5 | Chicken Guy |
| Initial Franchise Fee | $50,000 | $40,000 - $50,000 | Lump sum | See Item | Chicken |
| (4) |  |  |  | 5 | Guy |
| Grand Opening | $10,000 | $5,000 | Progress | As | Vendors |
| Required Spending (5) |  |  | payments | incurred |  |
| Leasehold Costs and Building and Site Improvements (6) | $350,000 - $1,900,000 | $350,000 - $1,200,000 | Progress payments | As arranged | Contractor, Architect |
| Furnishings, Fixtures | $195,000 - $600,000 | $195,000 - $600,000 | As | As | Vendors |
| and Equipment (7) |  |  | arranged | incurred |  |
| Signage (8) | $20,000 - $95,000 | $15,000 - $95,000 | As arranged | As incurred | Vendors |
| Point of Sale | $4.500 - $25,000 | $4,500 - $25,000 | As | As | Vendors |
| System (9) |  |  | arranged | incurred |  |
| Technology (10) | $15,000 - $30,000 | $15,000 - $25,000 | As arranged | As incurred | Vendors |
| Graphic Items (11) | $30,000 - $60,000 | $20,000 - $60,000 | As arranged | As incurred | Vendors |
| Type of

Question 25

How does the Chicken Guy initial franchise fee (Item 5) compare to the estimated costs for equipment and supplies in the initial investment (Item 7)?

Accepted Answer

| Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid |
|---|---|---|---|---|---|
| Deposit Fee(4) | $0 - $5,000 | $0 - $5,000 | Lump sum | See Item 5 | Chicken Guy |
| Initial Franchise Fee | $50,000 | $40,000 - $50,000 | Lump sum | See Item | Chicken |
| (4) |  |  |  | 5 | Guy |
| Grand Opening | $10,000 | $5,000 | Progress | As | Vendors |
| Required Spending (5) |  |  | payments | incurred |  |
| Leasehold Costs and Building and Site Improvements (6) | $350,000 - $1,900,000 | $350,000 - $1,200,000 | Progress payments | As arranged | Contractor, Architect |
| Furnishings, Fixtures | $195,000 - $600,000 | $195,000 - $600,000 | As | As | Vendors |
| and Equipment (7) |  |  | arranged | incurred |  |

Question 26

How does the initial franchise fee for a Chicken Guy non-traditional restaurant (Item 7) compare to the development fee for each restaurant under a Development Agreement (Item 5)?

Accepted Answer

ecified in the Development Agreement.

If you open a Chicken Guy! Restaurant within a Walmart store, you will sign the Nontraditional Location Addendum to the Franchise Agreement and you will pay a reduced Initial Franchise Fee of \$40,000.

#### **Deposit Fee**

When we approve your application to become a Chicken Guy! Restaurant franchisee, and prior to our preparation of your Franchise Agreement or Development Agreement, you will sign the Agreement Request Form attached as Exhibit C and pay a Deposit Fee in the amount of \$5,000.

Question 27

What is the range of the deposit fee for a Chicken Guy restaurant (Item 7) and how does it relate to the Development Fee described in Item 5?

Accepted Answer

| Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid |
|---|---|---|---|---|---|
| Deposit Fee(4) | $0 - $5,000 | $0 - $5,000 | Lump sum | See Item 5 | Chicken Guy |
| Initial Franchise Fee | $50,000 | $40,000 - $50,000 | Lump sum | See Item | Chicken |
| (4) |  |  |  | 5 | Guy |

When we approve your application to become a Chicken Guy! Restaurant franchisee, and prior to our preparation of your Franchise Agreement or Development Agreement, you will sign the Agreement Request Form attached as Exhibit C and pay a Deposit Fee in the amount of $5,000. The Deposit Fee is not refundable, but if you sign a Franchise Agreement or Development Agreement within 10 business days of receiving the agreement for signature, Chicken Guy shall apply the Deposit Fee toward payment of the Development Fee required under the Development Agreement or the Initial Franchise Fee required under the Franchise Agreement, as applicable.

You must pay a Development Fee in the amount of $50,000 for each Franchised Restaurant that you agree to develop when you sign the Development Agreement. If you sign a Development Agreement to develop three or more Franchised Restaurants, we will reduce the Development Fee to $40,000 for each Franchised Restaurant. The Development Fee is typically paid in one lump sum; however, in certain circumstances we may permit developers to pay the Development Fee in installments.

The Development Fee is not refundable, but will be credited against the Initial Franchise Fee, which is payable to us under each Franchise Agreement that you sign under the Development Agreement. The aggregate amount of the Initial Franchise Fee credits that we provide for the Franchise Agreements you sign will not exceed the amount of the Development Fee that you paid when you signed the Development Agreement. You must agree to develop at least one Chicken Guy! Restaurant under the Development Agreement.

Question 28

What is the relationship between the initial franchise fee for a Chicken Guy in-line restaurant (Item 7) and the development fee if a Development Agreement is signed (Item 5)?

Accepted Answer

FEES**

#### **Development Agreement**

You must pay a Development Fee in the amount of \$50,000 for each Franchised Restaurant that you agree to develop when you sign the Development Agreement. If you sign a Development Agreement to develop three or more Franchised Restaurants, we will reduce the Development Fee to \$40,000 for each Franchised Restaurant. The Development Fee is typically paid in one lump sum; however, in certain circumstances we may permit developers to pay the Development Fee in installments.

The Development Fee is not refundable, but will be credited against the Initial Franchise Fee, which is payable to us under each Franchise Agreement that you sign under the Development Agreement. The aggregate amount of the Initial Franchise Fee credits that we provide for the Franchise Agreements you sign will not exceed the amount of the Development Fee that you paid when you signed the Development Agreement. You must agree to develop at least one Chicken Guy! Restaurant under the Development Agreement.

#### **Franchise Agreement**

When you sign the Franchise Agreement, you shall pay an Initial Franchise Fee in the amount of \$50,000. The Initial Franchise Fee is fully earned by us when paid and is not refundable.

If you sign a Franchise Agreement pursuant to a Development Agreement, where you agreed to develop three or more Chicken Guy! Restaurants, we will reduce the Initial Franchise Fee to \$40,000. The specific amount of the Initial Franchise Fee that you will owe under each Franchise Agreement will be specified in the Development Agreement.

If you open a Chicken Guy!

Question 29

What happens if a Chicken Guy developer defaults on agreements with vendors or suppliers?

Accepted Answer

- **(11)** Developer, the Development Principal, any member of the Continuity Group or any 10% Owner remains in default beyond the applicable cure period: **(a)** under any other agreement with Chicken Guy or its affiliates; **(b)** under any real estate lease, equipment lease, or financing instrument relating to a Franchised Restaurant; or **(c)** with any vendor or supplier to a Franchised Restaurant; provided that if the default is not by Developer, Developer is given written notice of the default and 30 days to cure said default.

- **(13)** Developer fails or refuses to comply with any other provision of this Agreement or any requirement of the System and does not correct the failure or refusal within 30 days (10 days for monetary defaults) after receiving written notice of default.

Except for monetary defaults, if the default cannot be corrected within 30 days, Developer shall have such additional time to correct the default as reasonably required (not to exceed 90 days) provided that Developer begins taking the actions necessary to correct the default during the 30-day cure period and diligently and in good faith pursues those actions to completion.

Developer will be in default under this Section 13.A.(13) for any failure to materially comply with any of the requirements imposed by this Agreement or otherwise in writing, or to carry out the terms of this Agreement in good faith.

If Developer has received 2 or more notices of default pursuant to this Section 13.A.(13) within the previous 12 months, Chicken Guy shall be entitled to send Developer a notice of termination upon Developer's next default under this Section 13.A.(13) in that 12-month period without providing Developer an opportunity to remedy that default.

Source: Item 23 — RECEIPTS (FDD pages 50–286)

Question 30

Does Chicken Guy require a transfer fee to be paid as a condition of transfer approval?

Accepted Answer

- (iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 31

Under what conditions is a Chicken Guy franchisee prohibited from making alterations to the Franchised Restaurant?

Accepted Answer

- **(2)** Franchisee shall not make any material alterations to the Franchised Restaurant that affect operations or the image of the System without Chicken Guy's prior written approval. Franchisee acknowledges and agrees that the requirements of this Section are both reasonable and necessary to ensure continued public acceptance and patronage of Chicken Guy! Restaurants, to assist the Franchised Restaurant to compete effectively in the marketplace and to avoid deterioration or obsolescence of the operation of the Franchised Restaurant.

Source: Item 22 — CONTRACTS (FDD page 50)

Question 32

Is the $5,000 Deposit Fee for a Chicken Guy! franchise refundable, and under what conditions is it applied to other fees?

Accepted Answer

hise Fee of \$40,000.

#### **Deposit Fee**

When we approve your application to become a Chicken Guy! Restaurant franchisee, and prior to our preparation of your Franchise Agreement or Development Agreement, you will sign the Agreement Request Form attached as Exhibit C and pay a Deposit Fee in the amount of \$5,000. The Deposit Fee is not refundable, but if you sign a Franchise Agreement or Development Agreement within 10 business days of receiving the agreement for signature, Chicken Guy shall apply the Deposit Fee toward payment of the Development Fee required under the Development Agreement or the Initial Franchise Fee required under

Source: Item 5 — INITIAL FEES (FDD pages 10–11)

Question 33

According to the Chicken Guy addendum, what happens to any release required as a condition of renewal, sale and/or assignment/transfer to the extent prohibited by the North Dakota Franchise Investment Law?

Accepted Answer

Any release required as a condition of renewal, sale and/or assignment/transfer will not apply to the extent prohibited by the North Dakota Franchise Investment Law.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 34

According to the Chicken Guy addendum, what happens to Section 12.D. of the Agreement to the extent required by the North Dakota Franchise Investment Law?

Accepted Answer

- **4.** Liquidated Damages. To the extent required by the North Dakota Franchise Investment Law, Section 12.D. of the Agreement is deleted.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 35

According to the Chicken Guy addendum, what happens to Section 22.G of the agreement to the extent required by the North Dakota Franchise Investment Law?

Accepted Answer

**8.** Waiver of Certain Damages and Rights. To the extent required by the North Dakota Franchise Investment Law, Section 22.G. of the Agreement is deleted.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 36

According to the Chicken Guy addendum, under what circumstances will North Dakota law apply to claims?

Accepted Answer

Notwithstanding the foregoing, to the extent required by the North Dakota Franchise Investment Law, North Dakota law will apply to claims arising under the North Dakota Franchise Investment Law.

Notwithstanding the foregoing, to the extent required by the North Dakota Franchise Investment Law, you may bring an action in North Dakota for claims arising under the North Dakota Franchise Investment Law.

Notwithstanding the foregoing, the statute of limitations under North Dakota law applies with respect to claims arising under the North Dakota Franchise Investment Law.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 37

According to the Chicken Guy agreement, what happens if a proposed transferee's sales price is deemed too high by Chicken Guy?

Accepted Answer

- **(2)** The sales price shall not be so high, in Chicken Guy's reasonable judgment, as to jeopardize the ability of the transferee to develop, maintain, operate and promote the Franchised Restaurants and meet financial obligations to Chicken Guy, third party suppliers and creditors.

Chicken Guy's decision with respect to a proposed Transfer shall not create any liability on the part of Chicken Guy: **(a)** to the transferee, if Chicken Guy approves the Transfer and the transferee experiences financial difficulties; or **(b)** to Developer or the proposed transferee, if Chicken Guy disapproves the Transfer pursuant to this Section 10 or for other legitimate business purposes.

Chicken Guy, without any liability to Developer or the proposed transferee, has the right, in its reasonable business discretion, to communicate and counsel with Developer and the proposed transferee regarding any aspect of the proposed Transfer.

Source: Item 23 — RECEIPTS (FDD pages 50–286)

Question 38

According to the Chicken Guy agreement, what is the impact of a proposed transferee's failure to maintain the franchised restaurants on the transfer approval?

Accepted Answer

- **(2)** Developer acknowledges that, in order to preserve and enhance the reputation and goodwill of all restaurants franchised by Chicken Guy and the goodwill of the Proprietary Marks, all Franchised Restaurants must be properly developed, operated and maintained.

Accordingly, Developer agrees that Chicken Guy may refuse to approve a site for a proposed Franchised Restaurant unless Developer demonstrates sufficient financial capabilities, in Chicken Guy's sole judgment, applying standards consistent with criteria Chicken Guy uses to establish restaurants in other comparable market areas, to properly develop, operate and maintain the proposed Franchised Restaurant.

To this end, Developer shall furnish Chicken Guy with such financial statements and other information regarding Developer (or its Affiliated Entity, as defined in Section 3.D.) and the development and operation of the proposed Franchised Restaurant, including, without limitation, investment and financing plans for the proposed Franchised Restaurant, as Chicken Guy reasonably may require.

Source: Item 23 — RECEIPTS (FDD pages 50–286)

Question 39

According to the Chicken Guy agreement, what is the impact of a proposed transferee's failure to meet financial obligations on the transfer approval?

Accepted Answer

Guy in its reasonable business discretion and shall include numerous factors deemed relevant by Chicken Guy. These factors may include, but will not be limited to, the following:

- **(1)** The proposed transferee (and if the proposed transferee is other than an individual, such owners of an interest in the transferee as Chicken Guy may request) must demonstrate that it has extensive experience in high quality restaurant operations of a character and complexity similar to the restaurants franchised by Chicken Guy or its affiliates; meets the managerial, operational, experience, quality, character and business standards for a developer promulgated by Chicken Guy from time to time; possesses a good character, business reputation and credit rating; has an organization whose management culture is compatible with Chicken Guy's management culture; and has adequate financial resources and working capital to meet Developer's development obligations under this Agreement.

- **(2)** The sales price shall not be so high, in Chicken Guy's reasonable judgment, as to jeopardize the ability of the transferee to develop, maintain, operate and promote the Franchised Restaurants and meet financial obligations to Chicken Guy, third party suppliers and creditors.

Chicken Guy's decision with respect to a proposed Transfer shall not create any liability on the part of Chicken Guy: **(a)** to the transferee, if Chicken Guy approves the Transfer and the transferee experiences financial difficulties; or **(b)** to Developer or the proposed transferee, if Chicken Guy disapproves the Transfer pursuant to this Section 10 or for other legitimate business purposes.

Chicken Guy, without any liability to Developer or the proposed transferee, has the right, in its reasonable business discretion, to communicate and counsel with Developer and the proposed transferee regarding any aspect of the proposed Transfer.

- **(3)** All of Developer's accrued monetary obligations to Chicken Guy and its affiliates (whether arising under this Agreement or otherwise) and all other outstanding obligations related to the Franchised Restaurants (including, but not limited to, bills from suppliers, taxes, judgments and any required governmental reports, returns, affidavits or bonds) have been satisfied or, in the reasonable judgment of Chicken Guy, adequately provided for.

Chicken Guy reserves the right to require that a reasonable sum of money be placed in escrow to ensure that all of these obligations are satisfied.

Source: Item 23 — RECEIPTS (FDD pages 50–286)

Question 40

According to the Chicken Guy agreement, what is the impact of a proposed transferee's failure to promote the franchised restaurants on the transfer approval?

Accepted Answer

- **(2)** The sales price shall not be so high, in Chicken Guy's reasonable judgment, as to jeopardize the ability of the transferee to develop, maintain, operate and promote the Franchised Restaurants and meet financial obligations to Chicken Guy, third party suppliers and creditors.

Source: Item 23 — RECEIPTS (FDD pages 50–286)

Question 41

According to the Chicken Guy agreement, what law governs if the Federal Arbitration Act does not apply?

Accepted Answer

Except to the extent governed by the Federal Arbitration Act, the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C.

Sections 1051 *et seq*.), or other federal law, this Agreement, and any claim or controversy arising out of, or relating to, rights and obligations of the parties under this Agreement, and any other claim or controversy between the parties shall be governed by and construed in accordance with the laws of the State of Florida without regard to conflicts of laws principles.

Nothing in this Section is intended, or shall be deemed, to make any Florida law regulating the offer or sale of franchises or the franchise relationship applicable to this Agreement if such law would not otherwise be applicable.

Source: Item 23 — RECEIPTS (FDD pages 50–286)

Question 42

According to Item 4, could a principal officer of a company that filed for bankruptcy within one year after the officer held a position with Chicken Guy be a cause for disclosure?

Accepted Answer

Neither the franchisor, its affiliate, its predecessor, officers, or general partner during the 10-year period immediately before the date of the offering circular: (a) filed as debtor (or had filed against it) a petition to start an action under the U.S. Bankruptcy Code; (b) obtained a discharge of its debts under the bankruptcy code; or (c) was a principal officer of a company or a general partner in a partnership that either filed as a debtor (or had filed against it) a petition to start an action under the U.S. Bankruptcy Code or that obtained a discharge of its debts under the U.S. Bankruptcy Code during or within 1 year after that officer or general partner of the franchisor held this position in the company or partnership.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 43

According to the Maryland Addendum, what is deferred for Chicken Guy franchisees based on Chicken Guy's financial condition?

Accepted Answer

**1. Item 5: Initial Fees.** The following is added at the end of Item 5 of the Disclosure Document:

Based upon our financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until we complete our pre-opening obligations under the Franchise Agreement. In addition, all development fees and initial payments owed by developers shall be deferred until the first Chicken Guy! Restaurant under the Development Agreement opens.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 44

According to the Maryland Addendum, until what point are the initial fees and payments deferred for Chicken Guy franchisees?

Accepted Answer

**1. Item 5: Initial Fees.** The following is added at the end of Item 5 of the Disclosure Document:

Based upon our financial condition, the Maryland Securities Commissioner has required a financial assurance. Therefore, all initial fees and payments owed by franchisees shall be deferred until we complete our pre-opening obligations under the Franchise Agreement. In addition, all development fees and initial payments owed by developers shall be deferred until the first Chicken Guy! Restaurant under the Development Agreement opens.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 45

What action is a Chicken Guy franchisee required to take before terminating the agreement if instructed by their client to cease operations?

Accepted Answer

- **3. Term**. Section 2.A.(2) is deleted and replaced with the following:
  - **(2)** Notwithstanding the foregoing, this Agreement shall automatically terminate if Franchisee's contract to provide foodservice at the Facility terminates or expires without renewal. In addition, Franchisee may terminate this Agreement following 60 days' written notice to Chicken Guy if Franchisee's client at the Facility instructs Franchisee in writing to cease operating the Franchised Restaurant (provided Franchisee has exercised reasonable efforts to arrange a meeting between Franchisee's client and Chicken Guy, if Chicken Guy so elects, to discuss the continued operation of the Franchised Restaurant). If Franchisee's contract to provide foodservice at the Facility permits Franchisee's client to take this action on shorter notice, the notice period provided in that contract shall govern, provided Franchisee has provided Chicken Guy a copy of the relevant contract provision.

Source: Item 23 — RECEIPTS (FDD pages 50–286)

Question 46

Does the Chicken Guy addendum allow a developer to bring an action in North Dakota for claims arising under the North Dakota Franchise Investment Law?

Accepted Answer

**6.** Choice of Law. The following sentence is added to the end of Section 22.C:

Notwithstanding the foregoing, to the extent required by the North Dakota Franchise Investment Law, North Dakota law will apply to claims arising under the North Dakota Franchise Investment Law.

**7.** Choice of Venue. The following sentence is added to the end of Section 22.D.:

Notwithstanding the foregoing, to the extent required by the North Dakota Franchise Investment Law, you may bring an action in North Dakota for claims arising under the North Dakota Franchise Investment Law.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 47

Does the Chicken Guy Addendum modify the Development Agreement, and if so, how?

Accepted Answer

-----------------------------|----|-----------|-------|
|  |  |  |  |  |  |  |  | ("Development Agreement") between Chicken Guy (Franchisor), LLC ("Chicken |  |  |  |
| Guy") | and | simultaneously with the execution of the Development Agreement. |  |  |  |  |  | ("Developer") | is | entered | into |
- **1.** The provisions of this Addendum form an integral part of, and are incorporated into, the Development Agreement. This Addendum is being executed because: **(A)** the offer or sale of a franchise to Developer was made in the State of California; **(B)** Developer is a resident of the State of California; and/or **(C)** part or all of the Development Territory is located in the State of California.
- **2.** No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
- **3.** Any capitalized terms that are not defined in this Addendum shall have the meaning given them in the Development Agreement. Except as expressly modified by this Addendum, the Development Agreement remains unmodified and in full force and effect. This Addendum may be executed in multiple counterparts, each of which when executed and delivered shall be deemed an original and all of which together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page of this Addendum by facsimile and any other electronic transmission (including PDF) shall be as effective as delivery of a manually executed counterpart of this Addendum.

[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

**IN WITNESS WHEREOF**, the parties have duly executed, sealed and delivered this Addendum as of the day and year first above written.

#### **CHICKEN GUY (FRANCHISOR), LLC**

Print Name: DEVELOPER: Print Name:
#### **ADDENDUM TO THE CHICKEN GUY! RESTAURANT FRANCHISE AGREEMENT REQUIRED FOR CALIFORNIA FRANCHISEES**

| This | Addendum                                                           | to | the | Chicken | Guy! | Restaurant | Franchise | Agreement                                                     | dated |
|------|--------------------------------------------------------------------|----|-----|---------|------|------------|-----------|---------------------------------------------------------------|-------|
|      |                                                                    |    |     |         |      |            |           | ("Franchise Agreement") between Chicken Guy (Franchisor), LLC |       |
|      |                                                                    |    |     |         |      |            |           | ("Chicken Guy") and ("Franchisee") is entered                 |       |
|      | into simultaneously with the execution of the Franchise Agreement. |    |     |         |      |            |           |                                                               |       |

- **1.** The provisions of this Addendum form an integral part of, and are incorporated into, the Franchise Agreement. This Addendum is being executed because: **(A)** the offer or sale of a franchise to Franchisee was made in the State of California; **(B)** Franchisee is a resident of the State of California; and/or **(C)** the Franchised Restaurant will be located and/or operated, and/or all or part of the Protected Area will be located, in the State of California.
- **2.** No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
- **3.** Any capitalized terms that are not defined in this Addendum shall have the meaning given them in the Franchise Agreement. Except as expressly modified by this Addendum, the Franchise Agreement remains unmodified and in full force and effect. This Addendum may be executed in multiple counterparts, each of which when executed and delivered shall be deemed an original and all of which together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page of this Addendum by facsimile and any other electronic transmission (including PDF) shall be as effective as delivery of a manually executed counterpart of this Addendum.

[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

**IN WITNESS WHEREOF**, the parties have duly executed, sealed and delivered this Addendum as of the day and year first above written.

#### **CHICKEN GUY (FRANCHISOR), LLC**

Print Name: Print Name:
**ADDENDA REQUIRED BY**

**THE STATE OF ILLINOIS**

#### **ADDENDUM TO THE CHICKEN GUY! RESTAURANT DEVELOPMENT AGREEMENT REQUIRED FOR ILLINOIS DEVELOPERS**

| This | Addendum                                                        | to | the | Chicken | Guy! | Restaurant | Development                                                               | Agreement | dated |
|------|-----------------------------------------------------------------|----|-----|---------|------|------------|---------------------------------------------------------------------------|-----------|-------|
|      |                                                                 |    |     |         |      |            | ("Development Agreement") between Chicken Guy (Franchisor), LLC ("Chicken |           |       |
|      |                                                                 |    |     |         |      |            | Guy") and ("Developer") is entered into                                   |           |       |
|      | simultaneously with the execution of the Development Agreement. |    |     |         |      |            |                                                                           |           |       |

- 1. Illinois law governs the Development Agreement.
- 2. In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
- 3. Your rights upon Termination and Non-Renewal of an agreement are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.
- 4. In conformance with section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
- 5. No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.

[Signatures follow on next page.]

**IN WITNESS WHEREOF**, the parties have duly executed, sealed and delivered this Addendum as of the day and year first above written.

#### **CHICKEN GUY (FRANCHISOR), LLC**

Print Name: DEVELOPER: Print Name:
#### **ADDENDUM TO THE CHICKEN GUY! RESTAURANT FRANCHISE AGREEMENT REQUIRED FOR ILLINOIS FRANCHISEES**

| This                                                                                         | Addendum | to  | the | Chicken | Guy! | Restaurant | Franchise | Agreement                                                     | dated |
|----------------------------------------------------------------------------------------------|----------|-----|-----|---------|------|------------|-----------|---------------------------------------------------------------|-------|
|                                                                                              |          |     |     |         |      |            |           | ("Franchise Agreement") between Chicken Guy (Franchisor), LLC |       |
| ("Chicken                                                                                    | Guy")    | and |     |         |      |            |           |                                                               |       |
| ("Franchisee") is entered into simultaneously with the execution of the Franchise Agreement. |          |     |     |         |      |            |           |                                                               |       |

- 1. Illinois law governs the Franchise Agreement.
- 2. In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
- 3. Your rights upon Termination and Non-Renewal of an agreement are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.
- 4. In conformance with section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
- 5. No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.

[Signatures follow on next page.]

**IN WITNESS WHEREOF**, the parties have duly executed, sealed and delivered this Addendum as of the day and year first above written.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 48

How does the Chicken Guy Addendum modify the enforceability of covenants not to compete in North Dakota?

Accepted Answer

- **5.** Covenants Not To Compete. The following sentence is added to the end of Section 21.C.:

Covenants not to compete are generally considered unenforceable in the State of North Dakota; however, we will enforce the covenants to the maximum extent the law allows.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 49

What additional training programs for employees might Chicken Guy require from time to time?

Accepted Answer

cation if the CTR ceases to meet those standards.

#### Additional Training Programs

We have the right to require that you (or your Operating Principal), your restaurant managers, and any other employees that we designate take and successfully complete other training courses in addition to the initial manager training program. Although we do not currently charge a tuition fee for these additional training programs, we may do so in the future. We also reserve the right to modify the elements of the initial manager training program and any additional training programs, in our sole discretion. You will be required to pay all travel, living, food and other incidental expenses incurred by you and your employees while attending any training program.

#### **EXHIBIT A**

5. Attach Floor Plan of the Facility.

#### **FLOOR PLAN**

# **EXHIBIT G MANUAL TABLE OF CONTENTS**

# **TABLE OF CONTENTS**

| Name | Years of Training Experience with Chicken Guy!

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 25–34)

Question 50

What approvals are required for changes to the signage plans during construction for a Chicken Guy franchise?

Accepted Answer

If, in the course of construction, any such change in the Plans is contemplated, Tenant shall be required to obtain Landlord and Franchisor's written approval prior to proceeding.

Source: Item 23 — RECEIPTS (FDD pages 50–286)

Question 51

Does Chicken Guy have to approve a Franchisee's request to grant a security interest in its business, and under what condition can Chicken Guy's approval be conditioned?

Accepted Answer

- **H.

Grant of Security Interest.** Franchisee shall not grant any security interest in its business, the Franchised Restaurant, the Franchised Location or the assets used in the operation or development of the Franchised Restaurant without Chicken Guy's prior written approval, which will not be unreasonably withheld.

Chicken Guy's approval may be conditioned, on the written agreement by the secured party that, in the event of a default by Franchisee under any agreement related to the security interest, Chicken Guy shall have the right and option (but not the obligation) to purchase the rights of the secured party upon payment of all sums then due to the secured party.

Source: Item 22 — CONTRACTS (FDD page 50)

Question 52

Is Automobile Liability insurance required for a Chicken Guy franchise, and if so, under what circumstances and what are the coverage requirements?

Accepted Answer

- **(9)** Automobile Liability if Franchisee is engaged in any delivery operations.

Coverage shall be on a Symbol 1 (any auto) basis and in the amount of $1,000,000 per occurrence on any auto.

- (11) Umbrella or Excess Liability Insurance in the amount of $3,000,000 per occurrence and $3,000,000 in annual aggregate that includes the prior mentioned coverages as underlying

policies. Coverage shall follow form over general liability (including non-owned & hired liability), liquor liability, automobile liability and employer's liability.

Source: Item 22 — CONTRACTS (FDD page 50)

Question 53

What is a condition that must be met for a Franchisee to undertake a transfer of ownership interests according to the Chicken Guy franchise agreement?

Accepted Answer

- **(2)** Franchisee provides Chicken Guy written notice of its intent to undertake the Transfer at least 30 days prior to the effective date of the Transfer, together with documents demonstrating that the Transfer meets the requirements of this Section.

- **(3)** At the time of Franchisee's notice to Chicken Guy, Franchisee shall not be in default of this Agreement or any other agreements between Franchisee and Chicken Guy or its affiliates.

- **(4)** Franchisee is not then in material default of any provision of this Agreement or any other agreement between Franchisee and Chicken Guy or its affiliates, is not in default beyond the applicable cure period under any real estate lease, equipment lease or financing instrument relating to the Franchised Restaurant and is not in default beyond the applicable cure period with any vendor or supplier to the Franchised Restaurant.

- **(5)** Franchisee, all individuals who executed this Agreement and all guarantors of Franchisee's obligations must execute a general release and a covenant not to sue, in a form satisfactory to Chicken Guy, of any and all claims against Chicken Guy and its affiliates and their respective past and present officers, directors, shareholders, agents and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules and ordinances, and claims arising out of, or relating to, this Agreement, any other agreements between Franchisee and Chicken Guy or its affiliates and Franchisee's operation of the Franchised Restaurant and all other restaurants operated by Franchisee that are franchised by Chicken Guy or its affiliates.

- **(6)** Unless waived by Chicken Guy in its reasonable business discretion, the transferee and those employees of the transferee designated by Chicken Guy shall complete the training provided in Sections 12.A.-B.

- **C.**

Conditions of Transfer. If Chicken Guy approves a proposed Transfer, prior to the Transfer becoming effective:

- **(1)** The transferor shall pay Chicken Guy a nonrefundable Transfer fee in the amount of $10,000 in connection with Chicken Guy's review of the Transfer application.

- **(2)** Franchisee and the proposed transferee shall execute, at Chicken Guy's election, either an assignment agreement and any amendments to this Agreement deemed necessary or desirable by Chicken Guy to reflect the Transfer or Chicken Guy's then-current standard form of franchise agreement for an initial term ending on the expiration date of the Initial Term of this Agreement.

Source: Item 22 — CONTRACTS (FDD page 50)

Question 54

What is the condition for signing the Franchise Agreement and the Nontraditional Location Addendum for a Chicken Guy Nontraditional Restaurant?

Accepted Answer

If you buy a franchise to develop and operate a Nontraditional Restaurant, after we have approved the site, you will sign a Franchise Agreement (Exhibit E) and an Addendum to Franchise Agreement for a Nontraditional Location ("Nontraditional Location Addendum") (Exhibit F) and pay the Initial Franchise Fee. The Nontraditional Location Addendum will identify the larger building ("Facility") in which the Nontraditional Restaurant will be located. The Nontraditional Location Addendum also will identify the portion of the Facility in which the Nontraditional Restaurant will be located. All references in this disclosure document to "Nontraditional Restaurant" or "Nontraditional Location" refer only to your operation of that portion of the Facility that is occupied by the Chicken Guy! Restaurant. Unless otherwise noted, in this disclosure document, all references to a "Franchised Restaurant" or "Franchised Location" also will include a Nontraditional Restaurant or Nontraditional Location, respectively.

Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 6–8)

Question 55

What conditions must a Chicken Guy Developer meet to prevent Chicken Guy from operating or licensing others to operate Chicken Guy restaurants in the Development Territory during the Development Term?

Accepted Answer

This Section 2 does not prohibit Chicken Guy or its affiliates from: **(1)** operating, and licensing others to operate, during the Development Term, restaurants identified in whole or in part by the name and mark "CHICKEN GUY!" at any location outside of the

Development Territory; **(2)** operating, and licensing others to operate, after this Agreement terminates or expires, restaurants identified in whole or in part by the name and mark "CHICKEN GUY!" at any location; and **(3)** operating, and licensing others to operate, at any location, during or after the Development Term, any type of restaurant other than a restaurant identified in whole or in part by the name and mark "CHICKEN GUY!"

**C.** The restrictions contained in this Section 2 apply only to Chicken Guy and do not apply to restaurants identified in whole or in part by the name and mark "CHICKEN GUY!" under construction or in operation in the Development Territory as of the date of this Agreement.

Source: Item 23 — RECEIPTS (FDD pages 50–286)

Question 56

What conditions must the Chicken Guy franchisee meet to be allowed to sell beer and wine?

Accepted Answer

Provided Franchisee has obtained all necessary licenses and insurance, Tenant shall be allowed to sell beer and wine as part of its Permitted Use.

Source: Item 23 — RECEIPTS (FDD pages 50–286)

Question 57

Can Chicken Guy deny a renewal if the franchisee's other restaurants franchised by Chicken Guy's affiliates are not in compliance?

Accepted Answer

- **(f)** As determined by Chicken Guy in its sole discretion, Franchisee has operated the Franchised Restaurant and all of its other franchised Chicken Guy!

Restaurants in accordance with the applicable franchise agreements and with the System (as set forth in the Manual or otherwise and as revised from time to time by Chicken Guy) and has operated each of its other restaurants that are franchised by Chicken Guy or its affiliates in accordance with the applicable franchise agreement.

Source: Item 22 — CONTRACTS (FDD page 50)

Question 58

When is the deposit fee due to Chicken Guy?

Accepted Answer

STIMATED INITIAL INVESTMENT FRANCHISE AGREEMENT

| Type of Expenditure | Amount: In-line, End Cap or Drive Thru (1) | Amount: Nontraditional Restaurant (2) | Method of Payment (3) | When Due | To Whom Paid |
|---|---|---|---|---|---|
| Deposit Fee(4) | $0 - $5,000 | $0 - $5,000 | Lump sum | See Item 5 | Chicken Guy |
| Initial Franchise Fee | $50,000 | $40,000 - $50,000 | Lump sum | See Item | Chicken |
| (4) |  |  |  | 5 | Guy |
| Grand Opening | $10,000 | $5,000 | Progress | As | Vendors |
| Required Spending (5) |  |  | payments

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 16–20)

Question 59

What is the estimated cost range for an alcoholic beverage license for a Chicken Guy restaurant, and is it required?

Accepted Answer

,000 for the initial inventory of food and paper.
- 15. Alcoholic Beverage License. If you elect to obtain an alcoholic beverage license to serve wine and beer at your Franchised Restaurant, which is not required, you can expect to pay between \$10,000 and \$200,000. The cost of these licenses varies greatly from jurisdiction to jurisdiction depending on the licensing authority involved and the local alcoholic beverage license resale market, if any. Some states limit the available number of alcoholic beverage licenses. In such markets you are likely to be required to pay grossly inflated prices on the secondary market to obtain a license and you may decide not to offer

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 16–20)

Question 60

Does Chicken Guy ever waive the requirement for individuals to execute the Guarantee and Assumption of Developer's Obligations?

Accepted Answer

#### **F. Guarantees.**

- **(1)** All members of the Continuity Group and each of their spouses, if applicable, shall jointly and severally guarantee Developer's payment and performance under this Agreement and shall bind themselves to the terms of this Agreement pursuant to the attached Guarantee and Assumption of Developer's Obligations ("Guarantee"). Unless Developer is a publicly-held entity, all of Developer's officers, directors and all holders of a legal or beneficial interest in Developer of 10% or more ("10% Owners") and each of their spouses, if applicable, also shall jointly and severally guarantee Developer's payment and performance under this Agreement and also shall bind themselves to the terms of this Agreement pursuant to the attached Guarantee. Notwithstanding the foregoing, Chicken Guy reserves the right, in its sole discretion, to waive the requirement that some or all of the previously described individuals execute the attached Guarantee. Chicken Guy reserves the right to require any guarantor to provide personal financial statements to Chicken Guy from time to time.
- **(2)** With respect to 10% Owners, Developer acknowledges that, unless otherwise agreed to in writing by Chicken Guy, it is Chicken Guy's intent to have individuals (and not corporations, limited liability companies or other entities) execute the Guarantee. Accordingly, if any 10% Owner is not an individual, Chicken Guy shall have the right to have the Guarantee executed by individuals who have only an indirect ownership interest in Developer. (By way of example, if a 10% Owner of Developer is a corporation, Chicken Guy has the right to require that the Guarantee be executed by individuals who have an ownership interest in that corporation.)
- **(3)** If Developer, any guarantor or any parent, subsidiary or affiliate of Developer holds any interest in other restaurants that are franchised by Chicken Guy or its affiliates, the party who owns that interest shall execute, concurrently with this Agreement, a form of cross-guarantee to Chicken Guy and its affiliates for the payment of all obligations for such restaurants, unless waived in writing by Chicken Guy in its sole discretion. For purposes of this Agreement, an affiliate of Developer is any company controlled, directly or indirectly, by Developer or Developer's parent or subsidiary.

Source: Item 23 — RECEIPTS (FDD pages 50–286)

Question 61

To what extent will Chicken Guy enforce covenants not to compete in North Dakota, given that they are generally considered unenforceable?

Accepted Answer

Covenants not to compete are generally considered unenforceable in the State of North Dakota; however, we will enforce the covenants to the maximum extent the law allows.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 62

Does the Chicken Guy franchise agreement contain provisions that might be unenforceable in Washington?

Accepted Answer

unenforceable against an independent contractor of a franchisee under RCW 49.62.030 unless the independent contractor's earnings from the party seeking enforcement, when annualized, exceed \$250,000 per year (an amount that will be adjusted annually for inflation). As a result, any provision contained in the franchise agreement or elsewhere that conflicts with these limitations is void and unenforceable in Washington.

- 15. **Nonsolicitation Agreements.** RCW 49.62.060 prohibits a franchisor from restricting, restraining, or prohibiting a franchisee from (i) soliciting or hiring any employee of a franchisee of the same franchisor or (ii) soliciting or hiring any employee of the franchisor. As a result, any such provisions contained in the franchise agreement or elsewhere are void and unenforceable in Washington.
- 16. **Questionnaires and Acknowledgments.** No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
- 17. **Prohibitions on Communicating with Regulators.** Any provision in the franchise agreement or related agreements that prohibits the franchisee from communicating with or complaining to regulators is inconsistent with the express instructions in the Franchise Disclosure Document and is unlawful under RCW 19.100.180(2)(h).
- 18. **Advisory Regarding Franchise Brokers.** Under the Washington Franchise Investment Protection Act, a "franchise broker" is defined as a person that engages in the business of the offer or sale of franchises. A franchise broker represents the franchisor and is paid a fee for referring prospects to the franchisor and/or selling the franchise. If a franchisee is working with a franchise broker, franchisees are advised to carefully evaluate any information provided by the franchise broker about a franchise.
- 19. **Item 5: Initial Fees.** We have obtained a surety bond in the amount of \$100,000. The Washington Securities Division has made the issuance of our franchise registration permit contingent upon our maintenance of surety bond coverage acceptable to the state administrator until (a) all Washington franchisees have (1) received all initial training that they are entitled to under the Franchise Agreement or disclosure document, and (2) are open for business; or (b) the state administrator issues written authorization to the contrary.

#### **EXHIBIT K**

#### **STATE SPECIFIC ADDENDA TO THE AGREEMENTS**

**California Illinois Maryland Minnesota New York North Dakota Rhode Island South Dakota Washington**

**ADDENDA REQUIRED BY**

**THE STATE OF CALIFORNIA**

#### **ADDENDUM TO THE CHICKEN GUY! RESTAURANT DEVELOPMENT AGREEMENT REQUIRED FOR CALIFORNIA DEVELOPERS**

|       | This | Addendum                                                        | to | the | Chicken | Guy! | Restaurant | Development                                                               |    | Agreement | dated |
|-------|------|-----------------------------------------------------------------|----|-----|---------|------|------------|---------------------------------------------------------------------------|----|-----------|-------|
|  |  |  |  |  |  |  |  | ("Development Agreement") between Chicken Guy (Franchisor), LLC ("Chicken |  |  |  |
| Guy") | and | simultaneously with the execution of the Development Agreement. |  |  |  |  |  | ("Developer") | is | entered | into |
- **1.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

Question 63

For a Chicken Guy franchise prospect based in New York, what is the minimum time, expressed as the earlier of two conditions, that must pass between the first personal meeting or 10 business days and signing any agreements or paying any money to Chicken Guy or its affiliates?

Accepted Answer

If Chicken Guy (Franchisor), LLC offers you a franchise, it must provide this disclosure document to you 14 calendar days before you sign a binding agreement with, or make payment to, Chicken Guy (Franchisor), LLC or its affiliate in connection with the proposed sale or sooner if required by applicable state law. New York requires that Chicken Guy (Franchisor), LLC give you this disclosure document at the earlier of the first personal meeting or ten business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship.

Source: Item 22 — CONTRACTS (FDD page 50)

Question 64

Can a Chicken Guy franchisee bring an action in Washington if litigation is not precluded by the Development Agreement?

Accepted Answer

The provisions of this Addendum form an integral part of, are incorporated into, and modify the Development Agreement regardless of anything to the contrary contained therein. This Addendum applies if: (a) the offer to sell a franchise is accepted in Washington; (b) the purchaser of the franchise is a resident of Washington; and/or (c) the franchised business that is the subject of the sale is to be located or operated, wholly or partly, in Washington.

- 1. **Conflict of Laws.** In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act, chapter 19.100 RCW will prevail.

- 2. **Franchisee Bill of Rights.** RCW 19.100.180 may supersede provisions in the Development Agreement or related agreements concerning your relationship with the franchisor, including in the areas of termination and renewal of your franchise.

There may also be court decisions that supersede the Development Agreement or related agreements concerning your relationship with the franchisor.

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

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