Who must execute the general release and covenant not to sue for a Chicken Guy franchise transfer?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (5) Developer, all individuals who executed this Agreement and all guarantors of Developer's obligations must execute a general release and a covenant not to sue, in a form satisfactory to Chicken Guy, of any and all claims against Chicken Guy and its affiliates and their respective past and present officers, directors, shareholders, agents and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules and ordinances, and claims arising out of, or relating to, this Agreement and any other agreements between Developer and Chicken Guy or its affiliates and all other restaurants operated by Developer that are franchised by Chicken Guy or its affiliates.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, in order to transfer a franchise, the developer, all individuals who executed the franchise agreement, and all guarantors of the developer's obligations must execute a general release and a covenant not to sue. This release and covenant must be in a form satisfactory to Chicken Guy.
This requirement means that anyone who originally signed the franchise agreement or provided a guarantee for the franchisee's obligations must formally release Chicken Guy from any potential claims before the franchise can be transferred to a new owner. This is a standard practice in franchising to protect the franchisor from future liabilities related to the previous franchisee's operation of the business.
For a prospective Chicken Guy franchisee, this condition highlights the importance of understanding all obligations and potential liabilities before signing the franchise agreement or providing a guarantee. If a transfer is contemplated in the future, all original signatories must be willing to sign the release and covenant not to sue, which could have legal and financial implications for them.