What constitutes a default of the Chicken Guy franchise agreement related to funds in the account?

According to Chicken Guy's 2025 Franchise Disclosure Document, a franchisee's failure to maintain sufficient funds in the designated bank account for electronic funds transfer constitutes a default of the franchise agreement. This account is used for royalty fee payments and other amounts owed to Chicken Guy.

This requirement means that Chicken Guy franchisees must ensure they have enough money in their account to cover all payments due. This includes not only royalty fees based on gross sales but also any advertising fees or interest charges. Franchisees must comply with Chicken Guy's procedures for electronic funds transfers, including providing the necessary authorizations and documentation.

The FDD specifies that the franchisee must designate an account at a commercial bank and authorize Chicken Guy to initiate debit entries for payments. Failure to have sufficient funds available for withdrawal by the due date is a breach of the agreement, potentially leading to termination if not resolved. This underscores the importance of careful financial management and accurate sales reporting to avoid defaults.

Chicken Guy also retains the right to modify the payment method for royalties and other fees with written notice. This provision allows Chicken Guy to adapt its payment processes as needed, and franchisees must be prepared to adjust accordingly. Franchisees should maintain open communication with Chicken Guy regarding payment procedures to ensure compliance and avoid any unintentional defaults.