How does Chicken Guy exercise its option to purchase the assets after the purchase price is determined?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- **E.
Exercise of Option.** Within 10 days after the Purchase Price has been determined, Chicken Guy may exercise its option to purchase the Assets by so notifying Franchisee in writing ("Chicken Guy's Purchase Notice").
The Purchase Price shall be paid in cash or cash equivalents at the closing of the purchase ("Closing"), which shall take place no later than 60 days after the date of Chicken Guy's Purchase Notice.
From the date of Chicken Guy's Purchase Notice until Closing:
(1) Franchisee shall operate the Franchised Restaurant and maintain the Assets in the usual and ordinary course of business and maintain in full force all insurance policies required under this Agreement; and
(2) Chicken Guy shall have the right to appoint a manager, at Chicken Guy's expense, to control the day-to-day operations of the Franchised Restaurant, and Franchisee shall cooperate, and instruct its employees to cooperate, with the manager appointed by Chicken Guy.
Alternatively, Chicken Guy may require Franchisee to close the Franchised Restaurant during such time period without removing any Assets from the Franchised Restaurant.
- **F.
Due Diligence Period.** For a period of 30 days after the date of Chicken Guy's Purchase Notice ("Due Diligence Period"), Chicken Guy shall have the right to conduct such investigations as it deems necessary and appropriate to determine: (1) the ownership, condition and title of the Assets; (2) liens and encumbrances on the Assets; (3) environmental and hazardous substances at or upon the Franchised Location; and (4) the validity of contracts and liabilities inuring to Chicken Guy or affecting the Assets, whether contingent or otherwise.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy can exercise its option to purchase the assets of a franchised restaurant by notifying the franchisee in writing within 10 days after the purchase price has been determined. This written notification is referred to as "Chicken Guy's Purchase Notice."
Following the Purchase Notice, the closing of the purchase, where the Purchase Price is paid in cash or cash equivalents, must occur no later than 60 days after the date of Chicken Guy's Purchase Notice. During the period between the Purchase Notice and the Closing, the franchisee is obligated to continue operating the restaurant and maintaining the assets in the ordinary course of business, keeping all required insurance policies active.
During this period, Chicken Guy has the option to appoint a manager at its own expense to oversee the daily operations of the restaurant, and the franchisee must cooperate with this manager. Alternatively, Chicken Guy can require the franchisee to close the restaurant during this period without removing any assets. Chicken Guy also has a 30-day "Due Diligence Period" after the Purchase Notice to investigate the assets' ownership, condition, title, liens, environmental issues, and contract validity.