Does the Chicken Guy Franchise Agreement create a fiduciary relationship between the parties?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
- 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 the franchisee. The agreement specifies that the relationship is a commercial, arms' length business relationship. This means that neither party owes the other the heightened duties of care and loyalty that are characteristic of a fiduciary relationship.
This is a common provision in franchise agreements. The agreement emphasizes that no agency, employment, or partnership is created or implied by the terms of the agreement. The franchisee is considered an independent contractor solely responsible for the development and operation of their franchised restaurant, subject to the conditions and covenants established by the agreement.
The franchisee is responsible for ensuring the restaurant's compliance with all applicable laws, ordinances, and regulations. Chicken Guy has no responsibility to ensure compliance and bears no liability if the restaurant violates any law, ordinance, or regulation. The franchisee must also indicate their independent ownership of the Franchised Restaurant in all public records and relationships, further reinforcing the arms-length nature of the relationship.
Prospective franchisees should understand that this arrangement places the onus of business operations and legal compliance squarely on their shoulders. While Chicken Guy provides a franchise system and brand, franchisees are not considered to be in a partnership or other special relationship that would give rise to fiduciary duties.