Does Chicken Guy assume liability to the developer or proposed transferee if Chicken Guy disapproves the transfer?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
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)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy's decision regarding a proposed transfer does not create any liability on its part. Specifically, Chicken Guy assumes no liability to the developer or the proposed transferee if it disapproves the transfer, provided the disapproval is pursuant to Section 10 of the agreement or for other legitimate business purposes. This protects Chicken Guy from potential legal claims if a transfer is denied.
Furthermore, Chicken Guy has the right to communicate and counsel with both the developer and the proposed transferee regarding any aspect of the proposed transfer without incurring any liability. This allows Chicken Guy to provide guidance and express concerns without fear of being held responsible for the outcome of the transfer process.
This provision is typical in franchise agreements, as franchisors want to maintain control over who enters their system and avoid potential lawsuits from disgruntled parties involved in transfer disputes. Prospective Chicken Guy franchisees should understand that Chicken Guy has significant discretion in approving or disapproving transfers and will not be liable for any financial repercussions resulting from such decisions.