What is Chicken Guy's criteria regarding the sales price of a Chicken Guy franchise transfer?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) The sales price shall not be so high, in Chicken Guy's reasonable judgment, as to jeopardize the ability of the transferee to develop, maintain, operate and promote the Franchised Restaurant and meet financial obligations to Chicken Guy, third party suppliers and creditors.
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.
Chicken Guy, without any liability to Franchisee or the proposed transferee, has the right, in its reasonable business discretion, to communicate and counsel with Franchisee and the proposed transferee regarding any aspect of the proposed Transfer.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the sales price for a franchise transfer must not be so high that it could jeopardize the transferee's ability to successfully manage the restaurant. Specifically, Chicken Guy will assess whether the price might prevent the new franchisee from developing, maintaining, operating, and promoting the restaurant, as well as meeting their financial obligations to Chicken Guy, third-party suppliers, and creditors. This evaluation is based on Chicken Guy's reasonable judgment.
This condition protects the Chicken Guy system by ensuring that new franchisees are not burdened with excessive debt from the outset. A high sales price could strain the transferee's finances, potentially leading to underinvestment in the business, poor operational standards, or even default on payments to Chicken Guy and other essential parties. By setting this criterion, Chicken Guy aims to maintain the quality and consistency of its brand across all locations.
It's important to note that Chicken Guy's decision regarding a proposed transfer does not create any liability for Chicken Guy, either to the transferee if they experience financial difficulties after the transfer or to the franchisee or proposed transferee if Chicken Guy disapproves the transfer. Chicken Guy also has the right to communicate and counsel with both the franchisee and the proposed transferee regarding any aspect of the proposed transfer, without incurring any liability.
For a prospective franchisee, this means that when planning to sell their Chicken Guy franchise, they must consider the reasonableness of the asking price. Setting an unrealistically high price could lead to Chicken Guy rejecting the transfer, even if a buyer is willing to pay it. Franchisees should consult with Chicken Guy and seek professional advice to determine a fair and supportable sales price that aligns with the brand's interests and the financial health of the incoming franchisee.