Is the Development Fee paid to Chicken Guy refundable, and when is it considered fully earned?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
ale of Franchised Restaurant on Developer's Obligations.** If, during the Development Term, Developer sells a Franchised Restaurant that was developed pursuant to this Agreement, that Franchised Restaurant will continue to be counted as a Franchised Restaurant for the purpose of meeting Developer's obligations under the Development Schedule, provided that the sale has been approved by Chicken Guy and only so long as that restaurant continues to be operated pursuant to a franchise agreement with Chicken Guy or its affiliates.
- D. Execution of Franchise Agreements by Affiliated Entities. At Developer's request, Chicken Guy will permit the Franchise Agreement for any Franchised Restaurant in the Development Territory to be executed by a corporation, a limited liability company or general or limited partnership formed by Developer to develop and operate the Franchised Restaurant ("Affiliated Entity"), provided all of the following conditions are met: (1) Developer, the
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the Development Fee is not refundable and is considered fully earned by Chicken Guy when paid. The standard Development Fee is $50,000 per franchised restaurant that the developer agrees to develop in the Development Territory. However, if the developer commits to developing three or more franchised restaurants, the Development Fee is reduced to $40,000 per restaurant.
This means that once a developer signs the Development Agreement and pays the Development Fee to Chicken Guy, those funds are immediately considered earned by Chicken Guy and will not be returned, regardless of whether the developer successfully opens any restaurants. This is a significant financial commitment and risk for the developer.
However, the Development Fee can be credited towards the Initial Franchise Fees due for each restaurant, which are payable upon execution of each individual Franchise Agreement. The total amount credited cannot exceed the Development Fee initially paid. This provides some financial benefit to the developer, as the upfront Development Fee essentially acts as a pre-payment towards future franchise fees.
Prospective Chicken Guy developers should carefully consider the implications of the non-refundable Development Fee and ensure they have a solid plan for developing the agreed-upon number of restaurants within the Development Term. It is also important to review the attached Data Sheet, as referenced in the FDD, to confirm the specific Development Fee amount applicable to their agreement.