Are guarantors of a Chicken Guy franchisee's obligations required to execute a release for renewal?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (e) Franchisee, all individuals who executed this Agreement and all guarantors of Franchisee's obligations shall have executed 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, any other agreements between Franchisee and Chicken Guy or its affiliates and Franchisee's operation of the Franchised Restaurant, other Chicken Guy!
Restaurants operated by Franchisee and all other restaurants operated by Franchisee that are franchised by Chicken Guy or its affiliates.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, as a condition of renewal, all guarantors of a franchisee's obligations must execute a general release and a covenant not to sue. This release must be in a form satisfactory to Chicken Guy. The release covers any and all claims against Chicken Guy and its affiliates, including their officers, directors, shareholders, agents, and employees, in their corporate and individual capacities. These claims include those arising under federal, state, and local laws, rules, and ordinances.
This requirement extends to claims arising out of or relating to the Franchise Agreement, any other agreements between the franchisee and Chicken Guy or its affiliates, and the franchisee's operation of the franchised restaurant. It also encompasses all other restaurants operated by the franchisee that are franchised by Chicken Guy or its affiliates.
In practical terms, this means that if a franchisee seeks to renew their franchise agreement, any individual or entity that has guaranteed the franchisee's obligations must sign a release relinquishing any potential claims against Chicken Guy. This is a standard practice in franchising, intended to provide the franchisor with legal protection and ensure a clean slate for the renewed term. Franchisees should carefully review the terms of the release with legal counsel to understand the full scope of their obligations and potential liabilities.
This requirement ensures that Chicken Guy is protected from potential legal disputes arising from past operations before entering into a new franchise term with the franchisee. It is important for prospective franchisees and their guarantors to understand this condition and seek legal advice to fully comprehend the implications of signing such a release.