factual

Can a Chicken Guy franchisee terminate the Development Agreement under state law?

Chicken_Guy Franchise · 2025 FDD

Answer from 2025 FDD Document

    1. Illinois law governs the Development Agreement.
    1. In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
    1. Your rights upon Termination and Non-Renewal of an agreement are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.
    1. In conformance with section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
    1. No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.

[Signatures follow on next page.]

IN WITNESS WHEREOF, the parties have duly executed, sealed and delivered this Addendum as of the day and year first above written.

CHICKEN GUY (FRANCHISOR), LLC

Print Name: DEVELOPER: Print Name:

ADDENDUM TO THE CHICKEN GUY! RESTAURANT FRANCHISE AGREEMENT REQUIRED FOR ILLINOIS FRANCHISEES

  • 1. The provisions of this Addendum form an integral part of, and are incorporated into, the Development Agreement. This Addendum is being executed because: (A) the offer or sale of a franchise to Developer was made in the State of California; (B) Developer is a resident of the State of California; and/or (C) part or all of the Development Territory is located in the State of California.
  • 2. No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
  • 1. The provisions of this Addendum form an integral part of, and are incorporated into, the Development Agreement. This Addendum is being executed because: (A) the offer or sale of a franchise to Developer was made in the State of Minnesota; (B) Developer is a resident of the State of Minnesota; and/or (C) part or all of the Development Territory is located in the State of Minnesota.
  • 2. Releases. The following sentence is added to the end of Sections 10.B.(5) and 11:

Notwithstanding the foregoing, Developer will not be required to assent to a release, assignment, novation, or waiver that would relieve any person from liability imposed by Minnesota Statute §§ 80C.01 - 80C.22.

3. Injunctive Relief. Section 12.B.(1)(i) is deleted and replaced with the following statement:

Developer's use or duplication of the System or any part of the System in any other business would constitute an unfair method of competition, for which Chicken Guy would be entitled to all legal and equitable remedies, including the right to seek injunctive relief.

4. Termination. The following sentence is added to the end of Section 13.A.:

With respect to franchises governed by Minnesota law, Chicken Guy will comply with Minnesota Statute § 80C.14, Subdivisions 3, 4, and 5 which require, except in certain cases, that a franchisee be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice for non-renewal of the franchise agreements.

5. Choice of Venue. The following sentences are added to the end of Sections 22.C-D.:

Minnesota Statute § 80C.21 and Minnesota Rule 2860.4400J prohibit Chicken Guy from requiring litigation to be conducted outside Minnesota. In addition, nothing in our disclosure document or agreements can abrogate or reduce any of Developer's rights as provided for in Minnesota Statutes, Chapter 80C, or Developer's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.

As a result, any such provisions contained in the Development Agreement or elsewhere are void and unenforceable in Washington.

    1. Questionnaires and Acknowledgments. No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor.

This provision supersedes any other term of any document executed in connection with the franchise.

    1. Prohibitions on Communicating with Regulators. Any provision in the Development Agreement or related agreements that prohibits the franchisee from communicating with or complaining to regulators is inconsistent with the express instructions in the Franchise Disclosure Document and is unlawful under RCW 19.100.180(2)(h).
    1. Advisory Regarding Franchise Brokers. Under the Washington Franchise Investment Protection Act, a "franchise broker" is defined as a person that engages in the business of the offer or sale of franchises. A franchise broker represents the franchisor and is paid a fee for referring prospects to the franchisor and/or selling the franchise. If a franchisee is working with a franchise broker, franchisees are advised to carefully evaluate any information provided by the franchise broker about a franchise.
    1. Surety Bond. The following language is added to the end of Section 4 of the Development Agreement:

A surety bond in the amount of $100,000 has been obtained by Chicken Guy. The Washington Securities Division has made the issuance of Chicken Guy's permit contingent upon Chicken Guy maintaining surety bond coverage acceptable to the Administrator until (a) all Washington franchisees have (i) received all initial training that they are entitled to under the Franchise Agreement or Chicken Guy's franchise disclosure document, and (ii) are open for business; or (b) the Administrator issues written authorization to the contrary.

Except as expressly modified by this Addendum, the Development Agreement remains unmodified and in full force and effect.

PROVISION SECTION IN DEVELOPMENT AGREEMENT SUMMARY
a. Length of the development term Section 1.A. The term is from the date of execution of the Development Agreement to the date that you sign a lease or purchase the site for the last Franchised Restaurant that you are required to develop under the Development Schedule.
PROVISION SECTION IN DEVELOPMENT AGREEMENT SUMMARY
r. Non-competition covenants after the franchise is terminated or expires Section 12.C. No activity as described in q. above for one year within your Development Territory, within two miles of its border and within two miles of any then- existing Chicken Guy! Restaurant. If you violate the post-termination non-competition provisions, you must pay liquidated damages equal to our then- current Initial Franchise Fee and 8% of the Gross Sales of the competing business until the expiration of the non-competition period (subject to state law).
s. Modification of the Section 20 No modification generally without signed
agreement agreement, but we may modify the System.
t. Integration/merger clause Section 20 Only the terms of the Development Agreement are binding (subject to state law). Any representations or promises made outside this disclosure document and the Development Agreement may not be enforceable.
u. Dispute resolution by arbitration or mediation Sections 22A. & B. Subject to state law, either party will submit any claim, controversy, or dispute arising out of the agreement to non-binding mediation and, thereafter, to arbitration. The mediation and arbitration will take place in the city where our principal offices are located at the time the demand for mediation or arbitration is filed, which is currently Orlando, Florida.
v. Choice of forum Section 22.D. Subject to state law and subject to the mediation and arbitration requirement, any actions for injunctive relief must be filed in the jurisdiction where our principal offices are located at the time suit is filed, which is currently Orlando, Florida while simultaneously submitting the matter to mediation and then arbitration.
w. Choice of law Section 22.C. Subject to state law, Florida law applies.
PROVISION SECTION IN FRANCHISE AGREEMENT SUMMARY
a. Length of the Section 2 Ten years from the date that the Franchised Restaurant
franchise term opens.
b. Renewal or extension of the term Section 2.B. and NT Location Addendum Section 3 You can renew for one renewal term of ten years. If you sign a Nontraditional Location Addendum to the Franchise Agreement, you can renew for two five-year renewal terms.
PROVISION SECTION IN FRANCHISE AGREEMENT SUMMARY
q. Non-competition covenants during the term of the franchise Section 21.C. No diversion of any business or customer to any competitor; no interest in any restaurant business that that features chicken as a primary menu item (i.e., sales of chicken menu items comprise at least 20% of sales) or whose method of operation or trade dress is similar to that used in the System (subject to state law).
r. Non-competition covenants after the franchise is terminated or expires Section 21.C. No activity as described in q. above for one year within the Protected Area and within two miles of any then-existing Chicken Guy! Restaurant. If you violate the post-termination non-competition provisions, you must pay liquidated damages equal to our then-current Initial Franchise Fee and 8% of the Gross Sales of the competing business until the expiration of the non- competition period (subject to state law).
s. Modification of the Section 29 No modification generally without signed agreement,
agreement but we may modify the System and the Manual.
t. Integration/merger clause Section 29 Only the terms of the Franchise Agreement are binding (subject to state law). Any representations or promises made outside the disclosure document and the Franchise Agreement may not be enforceable.
u. Dispute resolution by arbitration or mediation Sections 31.A & B. Subject to state law, either party will submit any claim, controversy, or dispute arising out of the agreement to non-binding mediation and, thereafter, to arbitration. The mediation and arbitration will take place in the city where our principal offices are located at the time the demand for mediation or arbitration is filed, which is currently Orlando, Florida.
v. Choice of forum Section 31.D. Subject to state law and subject to the mediation and arbitration requirement, any actions for injunctive relief must be filed in the jurisdiction where our principal offices are located at the time suit is filed, which is currently Orlando, Florida while simultaneously submitting the matter to mediation and then arbitration.
w. Choice of law Section 31.C. Subject to state law, Florida law applies.
    1. Illinois law governs the Franchise Agreement.
    1. In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
    1. Your rights upon Termination and Non-Renewal of an agreement are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.
    1. In conformance with section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
    1. No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.

[Signatures follow on next page.]

IN WITNESS WHEREOF, the parties have duly executed, sealed and delivered this Addendum as of the day and year first above written.

CHICKEN GUY (FRANCHISOR), LLC

Print Name: Print Name: ADDENDA REQUIRED BY THE STATE OF MARYLAND

ADDENDUM TO THE CHICKEN GUY! RESTAURANT DEVELOPMENT AGREEMENT REQUIRED FOR MARYLAND DEVELOPERS

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)

What This Means (2025 FDD)

According to the 2025 Chicken Guy Franchise Disclosure Document, a franchisee's ability to terminate the Development Agreement is subject to state laws, which vary depending on the franchisee's location. For instance, addenda to the Development Agreement for franchisees in California, Minnesota, Maryland, and Washington include specific stipulations and modifications to ensure compliance with those states' franchise laws.

For Illinois franchisees, the FDD states that any provision in the franchise agreement designating jurisdiction and venue outside of Illinois is void, although arbitration may occur outside the state. Furthermore, franchisees' rights upon termination and non-renewal are governed by sections 19 and 20 of the Illinois Franchise Disclosure Act. The FDD also specifies that no statement or acknowledgment can waive claims under applicable state franchise law, including fraud in the inducement, or disclaim reliance on statements made by Chicken Guy.

The summary table in Item 17 of the 2025 Chicken Guy FDD indicates that several provisions within both the Development Agreement and the Franchise Agreement are subject to state law, including non-competition covenants, modification of the agreement, the integration/merger clause, dispute resolution, choice of forum, and choice of law. This means that while the agreements themselves may specify certain terms, these terms are superseded by any conflicting state laws, providing franchisees with potential additional rights or protections depending on their location.

Prospective Chicken Guy franchisees should carefully review the specific addenda and provisions applicable to their state to understand their rights and obligations regarding termination and other aspects of the Development Agreement. Consulting with a legal professional experienced in franchise law is advisable to ensure full comprehension of these rights and how they apply in their specific circumstances.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.
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