What constitutes a material breach of the Chicken Guy Franchise Agreement regarding covenants from third parties?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- F. Execution of Covenants by Third Parties. At Chicken Guy's request, Franchisee shall require and obtain the execution of covenants similar to those set forth in this Section 21 (including covenants applicable upon the termination of an individual's relationship with Franchisee) from all guarantors of Franchisee's obligations. Every covenant required by this Section 21.F. shall be in a form satisfactory to Chicken Guy, including, without limitation, specific identification of Chicken Guy as a third party beneficiary of such covenants with the independent right to enforce them. Failure by Franchisee to obtain execution of a covenant required by this Section 21.F. shall constitute a material breach of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, a material breach of the Franchise Agreement occurs if a franchisee fails to obtain the required covenants from certain third parties. Specifically, Chicken Guy can request that franchisees obtain covenants (agreements) similar to those outlined in Section 21 of the agreement from all guarantors of the franchisee's obligations.
These covenants must be in a form that Chicken Guy finds satisfactory. This includes explicitly identifying Chicken Guy as a third-party beneficiary, which grants Chicken Guy the independent right to enforce these covenants directly.
Therefore, if a Chicken Guy franchisee fails to secure the execution of a covenant as requested by Chicken Guy from a guarantor, this failure is considered a material breach of the Franchise Agreement, giving Chicken Guy grounds to take action against the franchisee.