What happens if Chicken Guy approves a transfer and the transferee experiences financial difficulties?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
Chicken Guy's decision with respect to a proposed Transfer shall not create any liability on the part of Chicken Guy: (a) to the transferee, if Chicken Guy approves the Transfer and the transferee experiences financial difficulties; or (b) to Developer or the proposed transferee, if Chicken Guy disapproves the Transfer pursuant to this Section 10 or for other legitimate business purposes.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy's decision to approve a transfer does not create any liability on their part to the transferee if the transferee subsequently experiences financial difficulties. This means that if Chicken Guy approves a transfer of the franchise to a new owner, and that new owner later struggles financially, Chicken Guy is not responsible for those financial difficulties.
This clause protects Chicken Guy from being held liable for the business decisions or financial management of the new franchisee after the transfer is complete. It is the responsibility of the transferee to ensure they have the resources and capabilities to successfully operate the Chicken Guy franchise.
This is a fairly standard provision in franchise agreements, as franchisors typically do not want to be held responsible for the success or failure of individual franchisees after a transfer has been approved. Prospective franchisees should carefully evaluate their own financial situation and business acumen before taking over a franchise, as they will bear the full risk of financial difficulties.