Does the Chicken Guy Franchise Agreement create a fiduciary relationship between Chicken Guy and the franchisee?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
25. RELATIONSHIP OF THE PARTIES
- A. This Agreement does not create a fiduciary or other special relationship between the parties. No agency, employment, or partnership is created or implied by the terms of this Agreement, and each party is not and shall not hold itself out as an agent, legal representative, partner, subsidiary, joint venturer, joint employer, or employee of the other for any purpose whatsoever. Neither this Agreement nor Chicken Guy's course of conduct is intended, nor may anything in this Agreement (nor Chicken Guy's course of conduct) be construed to state or imply that Chicken Guy is the employer of Franchisee's employees and/or independent contractors, nor vice versa. Franchisee shall have no right or power to, and shall not, bind or obligate Chicken Guy or its affiliates in any way or manner, nor represent that Franchisee has any right to do so.
- B. Franchisee is an independent contractor and is solely responsible for all aspects of the development and operation of the Franchised Restaurant, subject only to the conditions and covenants established by this Agreement. Without limiting the generality of the foregoing, Franchisee acknowledges that Chicken Guy has no responsibility to ensure that the Franchised Restaurant is developed and operated in compliance with all applicable laws, ordinances and regulations and that Chicken Guy shall have no liability in the event the development or operation of the Franchised Restaurant violates any law, ordinance or regulation.
- C. The sole relationship between Franchisee and Chicken Guy is a commercial, arms' length business relationship, and, except as provided in Section 26, there are no third party beneficiaries to this Agreement. Franchisee's business is, and shall be kept, totally separate and apart from any that may be operated by Chicken Guy. In all public records, in relationships with other persons, and on letterheads and business forms, Franchisee shall indicate its independent ownership of the Franchised Restaurant and that Franchisee is solely a franchisee of Chicken Guy. Franchisee shall post a sign in a conspicuous location in the Franchised Restaurant which will contain Franchisee's name and state that the Franchised Restaurant is independently owned and operated by Franchisee under a franchise agreement with Chicken Guy. Franchisee shall not issue any press releases without the prior written approval of Chicken Guy.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, the Franchise Agreement explicitly states that it does not create a fiduciary relationship between Chicken Guy and its franchisees. The agreement specifies that no agency, employment, or partnership is created or implied by the terms of the agreement. This means that franchisees are considered independent contractors and are not legal representatives, partners, subsidiaries, joint ventures, joint employers, or employees of Chicken Guy for any purpose.
This distinction is important because it clarifies the legal and financial responsibilities of each party. As independent contractors, Chicken Guy franchisees are solely responsible for all aspects of developing and operating their franchised restaurant, subject to the conditions and covenants established in the Franchise Agreement. Chicken Guy has no responsibility to ensure the restaurant complies with all applicable laws, ordinances, and regulations, and will not be liable if the franchisee violates any such laws.
The Franchise Agreement emphasizes that the relationship between Chicken Guy and the franchisee is a commercial, arms' length business relationship. Franchisees must indicate their independent ownership of the franchised restaurant in all public records, relationships with other persons, and on letterheads and business forms. They are also required to post a sign in a conspicuous location within the restaurant stating that it is independently owned and operated under a franchise agreement with Chicken Guy. This reinforces the independent nature of the franchisee's business and separates it from Chicken Guy's operations.