Does Chicken Guy assume liability if a transferee experiences financial difficulties after Chicken Guy approves 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 Franchisee or the proposed transferee, if Chicken Guy disapproves the Transfer pursuant to this Section 19 or for other legitimate business purposes.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy does not assume liability if a transferee experiences financial difficulties after Chicken Guy approves the transfer. The FDD states that Chicken Guy's decision regarding a proposed transfer does not create any liability on its part to the transferee if Chicken Guy approves the transfer and the transferee subsequently faces financial difficulties.
This means that if a franchisee sells their Chicken Guy franchise to a new owner, and Chicken Guy approves this transfer, Chicken Guy is not responsible for the new owner's financial performance. The new franchisee bears the full risk of operating the business successfully. This clause protects Chicken Guy from potential lawsuits or financial claims arising from the transferee's business operations.
This is a fairly standard practice in franchising, as franchisors typically do not guarantee the success of individual franchisees. Prospective franchisees should carefully evaluate their own financial capabilities and business acumen before investing in a Chicken Guy franchise, as their success will depend on their own efforts and market conditions.