What agreements must a Chicken Guy franchisee not be in material default under to be authorized to open?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
**A.
Right to Open the Franchised Restaurant.** Except for a conditional opening pursuant to Section 6.B., Chicken Guy will not authorize the opening of the Franchised Restaurant unless all the following conditions have been met:
- (1) Franchisee is not in material default under this Agreement or any other agreements with Chicken Guy; Franchisee is not in default beyond the applicable cure period under any real estate lease, equipment lease or financing instrument relating to the Franchised Restaurant; Franchisee is not in default beyond the applicable cure period with any vendor or supplier to the Franchised Restaurant; and for the previous 6 months, Franchisee has not been in default beyond the applicable cure period under any agreement with Chicken Guy.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, a franchisee must meet specific conditions to be authorized to open their restaurant. Chicken Guy will not authorize the opening of a franchised restaurant unless the franchisee is not in material default under the Franchise Agreement itself or any other agreements they have with Chicken Guy.
In addition to the franchise-related agreements, the franchisee must also not be in default beyond the applicable cure period for any real estate lease, equipment lease, or financing instrument that relates to the franchised restaurant. This means that the franchisee needs to be current on all payments and obligations related to the property, equipment, and financing used for the restaurant. Furthermore, the franchisee must not be in default beyond the applicable cure period with any vendor or supplier to the restaurant, ensuring that all suppliers are paid and that there are no outstanding issues with them.
Chicken Guy also requires that for the previous six months, the franchisee has not been in default beyond the applicable cure period under any agreement with Chicken Guy. This condition emphasizes the importance of maintaining a good standing with the franchisor over a sustained period before opening the restaurant. Meeting all these conditions ensures that the franchisee is financially stable and in good standing with all relevant parties, reducing the risk of operational issues after opening.