What are the default conditions that would prevent a Chicken Guy franchisee from renewing their franchise agreement?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) Upon the expiration of the Initial Term, Franchisee shall have an option to remain a franchisee at the Franchised Location for one renewal term of 10 years ("Renewal Term").
Franchisee shall give Chicken Guy written notice of whether or not it intends to exercise its renewal option not less than 8 months, nor more than 12 months, before the expiration of the Initial Term.
Franchisee's failure to provide Chicken Guy the required notice in a timely manner constitutes a waiver by Franchisee of its option to remain a franchisee beyond the expiration of the Initial Term.
(2) If Franchisee desires to continue as a franchisee for the Renewal Term, Franchisee must comply with all of the following conditions prior to and at the end of the Initial Term:
(a) Franchisee and its affiliates shall not be in default under this Agreement or any other agreements between Franchisee and Chicken Guy or its affiliates; Franchisee shall not be in default beyond the applicable cure period under any real estate lease, equipment lease or financing instrument relating to the Franchised Restaurant; Franchisee shall not be in default beyond the applicable cure period with any vendor or supplier to the Franchised Restaurant; and, for the 12 months before the date of Franchisee's notice and the 12 months before the expiration of the Initial Term, Franchisee and its affiliates shall not have been in default beyond the applicable cure period under this Agreement or any other agreements between Franchisee and Chicken Guy or its affiliates.
(b) Franchisee shall make the capital expenditures required to renovate and modernize the Franchised Restaurant to conform to the interior and exterior designs, décor, color schemes, furnishings and equipment and presentation of the Proprietary Marks consistent with the image of the System for new Chicken Guy!
Restaurants at the time Franchisee provides Chicken Guy the renewal notice, including such structural changes, remodeling, redecoration and modifications to existing improvements as may be necessary to do so.
(c) Franchisee and its employees at the Franchised Restaurant shall be in compliance with Chicken Guy's then-current training requirements.
(d) Franchisee shall have the right to remain in possession of the Franchised Location, or other premises acceptable to Chicken Guy, for the Renewal Term and all monetary obligations owed to Franchisee's landlord, if any, must be current.
(e) Franchisee, all individuals who executed this Agreement and all guarantors of Franchisee's obligations shall have executed a general release and a covenant not to sue, in a form satisfactory to Chicken Guy, of any and all claims against Chicken Guy and its affiliates and their respective past and present officers, directors, shareholders, agents and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules and ordinances, and claims arising out of, or relating to, this Agreement, any other agreements between Franchisee and Chicken Guy or its affiliates and Franchisee's operation of the Franchised Restaurant, other Chicken Guy!
Restaurants operated by Franchisee and all other restaurants operated by Franchisee that are franchised by Chicken Guy or its affiliates.
- (f) As determined by Chicken Guy in its sole discretion, Franchisee has operated the Franchised Restaurant and all of its other franchised Chicken Guy!
Restaurants in accordance with the applicable franchise agreements and with the System (as set forth in the Manual or otherwise and as revised from time to time by Chicken Guy) and has operated each of its other restaurants that are franchised by Chicken Guy or its affiliates in accordance with the applicable franchise agreement.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, several conditions could prevent a franchisee from renewing their franchise agreement for an additional 10-year term. The franchisee must provide Chicken Guy with written notice of their intent to renew between 8 and 12 months before the initial term expires. Failure to provide this notice on time constitutes a waiver of the renewal option.
To be eligible for renewal, the franchisee must not be in default under the franchise agreement or any other agreements with Chicken Guy or its affiliates. This includes defaults related to real estate leases, equipment leases, financing instruments, or vendor/supplier agreements. Furthermore, the franchisee must not have been in default beyond any applicable cure periods for the 12 months leading up to both the renewal notice date and the expiration of the initial term. The franchisee is also required to make necessary capital expenditures to renovate and modernize the restaurant to meet Chicken Guy's current image standards for new restaurants, including interior and exterior design, décor, and equipment.
Additional conditions include compliance with Chicken Guy's then-current training requirements for the franchisee and their employees. The franchisee must also ensure they have the right to remain in possession of the franchised location for the renewal term, with all monetary obligations to the landlord being current. Moreover, the franchisee, all individuals who executed the agreement, and all guarantors must execute a general release and covenant not to sue Chicken Guy. Finally, Chicken Guy has the discretion to determine if the franchisee has operated the restaurant and any other Chicken Guy franchises in accordance with the franchise agreements and the Chicken Guy system standards. Failure to meet these conditions gives Chicken Guy grounds to deny the renewal.