What constitutes a material breach of the Chicken Guy franchise agreement regarding transfers?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
(8) Any Transfer that requires Chicken Guy's prior written approval occurs without Franchisee having obtained that prior written approval.
(2) Except as otherwise provided in this Agreement, any purported Transfer, by operation of law or otherwise, not having the prior written consent of Chicken Guy shall be null and void and shall constitute a material breach of this Agreement, for which Chicken Guy may terminate this Agreement without providing Franchisee an opportunity to cure the breach.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, a material breach regarding transfers occurs when any transfer requiring Chicken Guy's prior written approval happens without obtaining that approval. This means a franchisee cannot sell, assign, or otherwise transfer any interest in the franchise, the restaurant, or its assets without first getting written consent from Chicken Guy.
Chicken Guy requires prior written approval for transfers because the franchise agreement is based on the franchisee's specific business skills, financial capacity, and experience. Chicken Guy wants to ensure that any new owner meets their standards for operating a high-quality foodservice operation. Therefore, any attempt to transfer ownership without approval is considered a serious violation of the agreement.
The FDD states that any transfer without prior written consent is considered null and void, and Chicken Guy has the right to terminate the agreement immediately without giving the franchisee a chance to fix the breach. This highlights the importance of adhering to the transfer requirements outlined in the franchise agreement. Franchisees need to be aware of these stipulations to avoid potential termination of their franchise agreement.