Must a Chicken Guy developer be in good standing with all agreements to undertake a transfer?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
(3) At the time of Developer's notice to Chicken Guy, Developer shall not be in default of this Agreement or any other agreements between Developer and Chicken Guy or its affiliates.
(4) Developer is not then in material default of any provision of this Agreement or any other agreement between Developer and Chicken Guy or its affiliates, is not in default beyond the applicable cure period under any real estate lease, equipment lease or financing instrument relating to Developer's Franchised Restaurants and is not in default beyond the applicable cure period with any vendor or supplier to Developer's Franchised Restaurants.
(3) All of Developer's accrued monetary obligations to Chicken Guy and its affiliates (whether arising under this Agreement or otherwise) and all other outstanding obligations related to the Franchised Restaurants (including, but not limited to, bills from suppliers, taxes, judgments and any required governmental reports, returns, affidavits or bonds) have been satisfied or, in the reasonable judgment of Chicken Guy, adequately provided for.
Chicken Guy reserves the right to require that a reasonable sum of money be placed in escrow to ensure that all of these obligations are satisfied.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, a developer must be in good standing with all agreements to undertake a transfer. Specifically, the developer cannot be in default of the Development Agreement or any other agreements with Chicken Guy or its affiliates. This requirement ensures that the developer has met all obligations to Chicken Guy before transferring the rights to another party.
Furthermore, the developer must not be in default beyond any applicable cure period under any real estate lease, equipment lease, or financing instrument related to the franchised restaurants. They also cannot be in default beyond the applicable cure period with any vendor or supplier to the franchised restaurants. This condition ensures that the restaurants are financially stable and that all obligations to landlords, equipment lessors, lenders, vendors, and suppliers are current.
Chicken Guy also requires that all monetary obligations to Chicken Guy and its affiliates are satisfied, along with all other outstanding obligations related to the franchised restaurants. This includes bills from suppliers, taxes, judgments, and any required governmental reports, returns, affidavits, or bonds. Chicken Guy may require a reasonable sum of money to be placed in escrow to ensure all obligations are satisfied. These stipulations protect Chicken Guy's interests and ensure a smooth transition to the new transferee, maintaining the brand's reputation and financial health.