Does Chicken Guy ever waive the requirement for individuals to execute the Guarantee and Assumption of Developer's Obligations?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
F. Guarantees.
- (1) All members of the Continuity Group and each of their spouses, if applicable, shall jointly and severally guarantee Developer's payment and performance under this Agreement and shall bind themselves to the terms of this Agreement pursuant to the attached Guarantee and Assumption of Developer's Obligations ("Guarantee"). Unless Developer is a publicly-held entity, all of Developer's officers, directors and all holders of a legal or beneficial interest in Developer of 10% or more ("10% Owners") and each of their spouses, if applicable, also shall jointly and severally guarantee Developer's payment and performance under this Agreement and also shall bind themselves to the terms of this Agreement pursuant to the attached Guarantee. Notwithstanding the foregoing, Chicken Guy reserves the right, in its sole discretion, to waive the requirement that some or all of the previously described individuals execute the attached Guarantee. Chicken Guy reserves the right to require any guarantor to provide personal financial statements to Chicken Guy from time to time.
- (2) With respect to 10% Owners, Developer acknowledges that, unless otherwise agreed to in writing by Chicken Guy, it is Chicken Guy's intent to have individuals (and not corporations, limited liability companies or other entities) execute the Guarantee. Accordingly, if any 10% Owner is not an individual, Chicken Guy shall have the right to have the Guarantee executed by individuals who have only an indirect ownership interest in Developer. (By way of example, if a 10% Owner of Developer is a corporation, Chicken Guy has the right to require that the Guarantee be executed by individuals who have an ownership interest in that corporation.)
- (3) If Developer, any guarantor or any parent, subsidiary or affiliate of Developer holds any interest in other restaurants that are franchised by Chicken Guy or its affiliates, the party who owns that interest shall execute, concurrently with this Agreement, a form of cross-guarantee to Chicken Guy and its affiliates for the payment of all obligations for such restaurants, unless waived in writing by Chicken Guy in its sole discretion. For purposes of this Agreement, an affiliate of Developer is any company controlled, directly or indirectly, by Developer or Developer's parent or subsidiary.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy reserves the right to waive the requirement that some or all individuals execute the Guarantee and Assumption of Developer's Obligations. This guarantee generally applies to all members of the Continuity Group and their spouses, as well as all of the company's officers, directors, and those holding a legal or beneficial interest of 10% or more in Chicken Guy.
This waiver is at Chicken Guy's sole discretion, meaning they have the authority to decide when and for whom they will waive this requirement. This could be a significant benefit for potential franchisees, as it could reduce the personal liability exposure for certain individuals involved in the franchise.
However, Chicken Guy also has the right to require any guarantor to provide personal financial statements from time to time. Furthermore, if a 10% owner is not an individual, Chicken Guy can require the guarantee to be executed by individuals who have an indirect ownership interest in the developer. Chicken Guy also requires a cross-guarantee if the developer or any affiliate holds interests in other Chicken Guy franchises, unless this is waived in writing by Chicken Guy.