Does the Chicken Guy Franchise Agreement grant any rights or remedies to third parties?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
16. INSURANCE
A. Procurement of Insurance by Franchisee. Franchisee shall be responsible for all loss or damage arising from or related to Franchisee's development and operation of the Franchised Restaurant, and for all demands or claims with respect to any loss, liability, personal injury, death, property damage, or expense whatsoever occurring upon the premises of, or in connection with the development or operation of, the Franchised Restaurant. Franchisee shall maintain in full force and effect throughout the term of this Agreement that insurance which Franchisee determines is necessary or appropriate for liabilities caused by or occurring in connection with the development or operation of the Franchised Restaurant which shall include, at a minimum, insurance policies of the kinds, and in the amounts, required by Section 16.B. Chicken Guy, and any entity with an insurable interest designated by Chicken Guy, shall be an additional insured in all liability policies (except workers compensation) to the extent each has an insurable interest.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the Franchise Agreement specifies that, except as provided in Section 26, there are no third-party beneficiaries to the agreement. This means that the agreement is primarily intended to benefit Chicken Guy and the franchisee, and not any other individuals or entities.
This clause is included to prevent third parties from claiming rights or remedies under the Franchise Agreement. For example, a supplier or customer of the franchisee would not be able to sue Chicken Guy for breach of contract based on the terms of the Franchise Agreement. This limitation helps to protect Chicken Guy from potential liabilities arising from its franchisees' operations.
However, the document also states that Chicken Guy, and any entity with an insurable interest designated by Chicken Guy, shall be an additional insured in all liability policies (except workers compensation) to the extent each has an insurable interest. This indicates that while the agreement generally avoids creating third-party beneficiaries, certain entities designated by Chicken Guy as having an insurable interest will be included as additional insured parties in the franchisee's liability insurance policies, providing them with a degree of protection under those policies.