Does the agreement with Chicken Guy create a fiduciary relationship between the parties?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- A. This Agreement does not create a fiduciary or other special relationship between the parties. No agency, employment, or partnership is created or implied by the terms of this Agreement, and each party is not and shall not hold itself out as an agent, legal representative, partner, subsidiary, joint venturer, joint employer, or employee of the other for any purpose whatsoever. Neither this Agreement nor Chicken Guy's course of conduct is intended, nor may anything in this Agreement (nor Chicken Guy's course of conduct) be construed to state or imply that Chicken Guy is the employer of Developer's employees and/or independent contractors, nor vice versa. Developer shall have no right or power to, and shall not, bind or obligate Chicken Guy or its affiliates in any way or manner, nor represent that Developer has any right to do so.
- B. Developer is an independent contractor and is solely responsible for all aspects of the development and operation of the Franchised Restaurants, subject only to the conditions and covenants established by this Agreement and the Franchise Agreements. Without limiting the generality of the foregoing, Developer acknowledges that Chicken Guy has no responsibility to ensure that the Franchised Restaurants are developed in compliance with all applicable laws, ordinances and regulations and that Chicken Guy shall have no liability in the event the development or operation of the Franchised Restaurants violates any law ordinance or regulation.
- C. The sole relationship between Developer and Chicken Guy is a commercial, arms' length business relationship and, except as provided in Section 16, there are no third party beneficiaries to this Agreement. Developer's business is, and shall be kept, totally separate and apart from any that may be
operated by Chicken Guy. In all public records, in relationships with other persons, and on letterheads and business forms, Developer shall indicate its independent ownership of the Franchised Restaurants and that Developer is solely a franchisee of Chicken Guy. Developer shall not issue any press releases without the prior written approval of Chicken Guy.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the franchise agreement does not establish a fiduciary relationship between Chicken Guy and the franchisee (referred to as the Developer). The agreement explicitly states that no agency, employment, or partnership is created or implied by the terms of the agreement. This means that neither party owes the other the heightened duties of care and loyalty that are characteristic of a fiduciary relationship.
Chicken Guy and the franchisee are considered independent contractors, each responsible for their own aspects of the business. The franchisee is responsible for the development and operation of the franchised restaurants, while Chicken Guy provides the franchise system and brand. This independent contractor status means the franchisee is responsible for ensuring compliance with all applicable laws and regulations during development and operation.
The relationship between Chicken Guy and the franchisee is defined as a commercial, arms' length business relationship. The franchisee must indicate their independent ownership of the franchised restaurants in all public records and business dealings. This separation reinforces the absence of a fiduciary duty, as each party is expected to act in their own best interest within the bounds of the agreement.
This arrangement is typical in franchising, where the franchisor and franchisee operate as separate entities with defined roles and responsibilities. Franchisees should be aware that they cannot legally bind or obligate Chicken Guy in any way, and they should not represent themselves as having the authority to do so.