Can Chicken Guy condition approval of a relocation upon the payment of a minimum royalty fee?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
If we approve a relocation of your Franchised Restaurant, we have the right to charge you for all reasonable expenses actually incurred in connection with consideration of the request, and we may condition our approval upon the payment of an agreed minimum royalty fee to Chicken Guy during the period in which the Franchised Restaurant is not in operation.
Source: Item 12 — TERRITORY (FDD pages 34–36)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, if a franchisee wishes to relocate their restaurant, Chicken Guy's approval is required. Chicken Guy may withhold this approval at their discretion, considering factors such as population density and the proximity of other Chicken Guy restaurants.
Importantly, Chicken Guy has the right to charge the franchisee for all reasonable expenses incurred while reviewing the relocation request. Furthermore, Chicken Guy can condition the approval of the relocation on the franchisee's agreement to pay a minimum royalty fee during the period when the restaurant is not operating due to the move.
This condition regarding the minimum royalty fee during relocation is a significant point for potential franchisees. It means that even when the restaurant is not generating revenue during the relocation process, the franchisee may still be obligated to pay royalties to Chicken Guy. This could impact the franchisee's financial planning and profitability, especially if the relocation process is lengthy. Franchisees should carefully consider these potential costs and negotiate the terms of the minimum royalty fee with Chicken Guy before agreeing to a relocation.