What customary representations and warranties is Chicken Guy entitled to when purchasing the interest?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
In purchasing the interest, Chicken Guy or its designee shall be entitled to set off any monies owed to Chicken Guy and/or its affiliates by Developer and Chicken Guy or its designee shall be entitled to all customary representations and warranties that the assets are free and clear (or, if not, accurate and complete disclosure) as to: (a) ownership, condition and title; (b) liens and encumbrances; (c)
environmental and hazardous substances; and (d) validity of contracts inuring to the purchaser or affecting the assets, whether contingent or otherwise.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, when Chicken Guy exercises its right of first refusal to purchase a seller's interest, it is entitled to customary representations and warranties. These warranties ensure that the assets are free and clear, or if not, that there is accurate and complete disclosure regarding specific aspects of the business.
Specifically, Chicken Guy is entitled to representations and warranties related to the following: (a) ownership, condition, and title of the assets; (b) any liens and encumbrances affecting the assets; (c) environmental and hazardous substances associated with the assets; and (d) the validity of contracts that either benefit the purchaser or otherwise affect the assets, whether these contracts are contingent or not.
This provision protects Chicken Guy by ensuring they receive accurate information about the business they are purchasing. It allows Chicken Guy to assess the true value and potential liabilities associated with the interest being acquired. The representations and warranties cover key areas of concern in any business acquisition, providing Chicken Guy with legal recourse if the information provided by the seller is inaccurate or incomplete.