Can Chicken Guy disapprove a Transfer if the sales price is too high?
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, Chicken Guy can disapprove a transfer if the sales price is too high. Specifically, Chicken Guy can assess whether the proposed sales price jeopardizes the transferee's ability to successfully operate the franchise.
Chicken Guy will assess if the sales price is so high that it could negatively impact the transferee's ability to develop, maintain, operate, and promote the franchised restaurant. This also includes the transferee's ability to meet financial obligations to Chicken Guy, third-party suppliers, and creditors. This protects the Chicken Guy system by ensuring that new franchisees are set up for financial success and stability.
Chicken Guy's decision to approve or disapprove a transfer does not create any liability for Chicken Guy. This means Chicken Guy is not liable to the transferee if they experience financial difficulties after an approved transfer, or to the franchisee or proposed transferee if the transfer is disapproved for legitimate business reasons. 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.