How is the Early Termination Damages fee calculated for a Chicken Guy franchise?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE(1) | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| Early Termination Damages | Amount of the average weekly Royalty Fees that you owed for the one year period prior to termination, multiplied by the lesser of 104 weeks or the number of weeks remaining in the term of the Franchise Agreement | Within 30 days following the termination | Payable if you default on your obligations and we terminate the Franchise Agreement prior to the expiration of the Initial Term. |
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the Early Termination Damages fee is calculated based on the average weekly Royalty Fees owed during the one-year period prior to termination. This average is then multiplied by the lesser of 104 weeks or the number of weeks remaining in the term of the Franchise Agreement. This fee is payable if the franchisee defaults on their obligations, leading Chicken Guy to terminate the Franchise Agreement before the initial term expires.
For a prospective Chicken Guy franchisee, this means that if the franchise agreement is terminated early due to a default, they will be required to pay a significant fee. This fee is designed to compensate Chicken Guy for the lost future royalty payments they would have received had the franchisee continued to operate the business for the full term. The calculation method ensures that the damages are proportional to the franchisee's past performance and the remaining duration of the agreement.
The fact that the calculation uses the lesser of 104 weeks or the remaining term is favorable to the franchisee. If the remaining term is less than two years (104 weeks), the calculation will be based on that shorter period. This could substantially reduce the amount owed compared to using the full 104 weeks. The Early Termination Damages are due within 30 days following the termination.
Franchisees should be aware of the conditions under which Chicken Guy can terminate the agreement and the potential financial implications. Understanding these terms is crucial for managing the risks associated with the franchise and ensuring compliance with the Franchise Agreement. It is common in franchising for early termination fees to be imposed to protect the franchisor's investment and expected returns.