What factors does Chicken Guy consider when deciding whether to approve a proposed transfer?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
Guy in its reasonable business discretion and shall include numerous factors deemed relevant by Chicken Guy. These factors may include, but will not be limited to, the following:
(1) The proposed transferee (and if the proposed transferee is other than an individual, such owners of an interest in the transferee as Chicken Guy may request) must demonstrate that it has extensive experience in high quality restaurant operations of a character and complexity similar to the restaurants franchised by Chicken Guy or its affiliates; meets the managerial, operational, experience, quality, character and business standards for a developer promulgated by Chicken Guy from time to time; possesses a good character, business reputation and credit rating; has an organization whose management culture is compatible with Chicken Guy's management culture; and has adequate financial resources and working capital to meet Developer's development obligations under this Agreement.
(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 Restaurants 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 Developer or the proposed transferee, if Chicken Guy disapproves the Transfer pursuant to this Section 10 or for other legitimate business purposes.
Chicken Guy, without any liability to Developer or the proposed transferee, has the right, in its reasonable business discretion, to communicate and counsel with Developer and the proposed transferee regarding any aspect of the proposed Transfer.
- (3) All of Developer's accrued monetary obligations to Chicken Guy and its affiliates (whether arising under this Agreement or otherwise) and all other outstanding obligations related to the Franchised Restaurants (including, but not limited to, bills from suppliers, taxes, judgments and any required governmental reports, returns, affidavits or bonds) have been satisfied or, in the reasonable judgment of Chicken Guy, adequately provided for.
Chicken Guy reserves the right to require that a reasonable sum of money be placed in escrow to ensure that all of these obligations are satisfied.
(4) Developer is not then in material default of any provision of this Agreement or any other agreement between Developer and Chicken Guy or its affiliates, is not in default beyond the applicable cure period under any real estate lease, equipment lease or financing instrument relating to Developer's Franchised Restaurants and is not in default beyond the applicable cure period with any vendor or supplier to Developer's Franchised Restaurants.
(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.
(6) Unless waived by Chicken Guy in its reasonable business discretion, the transferee and those employees of the transferee designated by Chicken Guy shall complete the development training programs provided in Section 5.H.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the decision to approve a proposed transfer is made in Chicken Guy's reasonable business discretion and includes numerous factors deemed relevant by Chicken Guy. These factors include the proposed transferee demonstrating extensive experience in high-quality restaurant operations of a character and complexity similar to the restaurants franchised by Chicken Guy or its affiliates. The transferee must also meet the managerial, operational, experience, quality, character, and business standards for a developer promulgated by Chicken Guy from time to time, possess a good character, business reputation, and credit rating, have an organization whose management culture is compatible with Chicken Guy's management culture, and have adequate financial resources and working capital to meet the Developer's development obligations under the Development Agreement.
Chicken Guy also considers whether the sales price is so high that it would jeopardize the ability of the transferee to develop, maintain, operate, and promote the Franchised Restaurants and meet financial obligations to Chicken Guy, third-party suppliers, and creditors. All of the Developer's accrued monetary obligations to Chicken Guy and its affiliates (whether arising under the Development Agreement or otherwise) and all other outstanding obligations related to the Franchised Restaurants (including, but not limited to, bills from suppliers, taxes, judgments, and any required governmental reports, returns, affidavits, or bonds) must be satisfied or adequately provided for in the reasonable judgment of Chicken Guy.
Chicken Guy also requires that the Developer is not in material default of any provision of the Development Agreement or any other agreement between the Developer and Chicken Guy or its affiliates. The Developer must also not be in default beyond the applicable cure period under any real estate lease, equipment lease, or financing instrument relating to the Developer's Franchised Restaurants and is not in default beyond the applicable cure period with any vendor or supplier to the Developer's Franchised Restaurants. The Developer, all individuals who executed the Development Agreement, and all guarantors of the 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. Unless waived by Chicken Guy in its reasonable business discretion, the transferee and those employees of the transferee designated by Chicken Guy must complete the development training programs provided in Section 5.H.
Prospective franchisees should note that Chicken Guy retains significant discretion in approving or disapproving a transfer. While the FDD outlines several factors Chicken Guy considers, the decision ultimately rests on Chicken Guy's reasonable business judgment. Franchisees looking to transfer their Chicken Guy business will need to ensure the proposed transferee meets all of Chicken Guy's requirements and that all financial and legal obligations are up to date.