What happens if a Chicken Guy developer defaults on agreements with vendors or suppliers?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
(11) Developer, the Development Principal, any member of the Continuity Group or any 10% Owner remains in default beyond the applicable cure period: (a) under any other agreement with Chicken Guy or its affiliates; (b) under any real estate lease, equipment lease, or financing instrument relating to a Franchised Restaurant; or (c) with any vendor or supplier to a Franchised Restaurant; provided that if the default is not by Developer, Developer is given written notice of the default and 30 days to cure said default.
(13) Developer fails or refuses to comply with any other provision of this Agreement or any requirement of the System and does not correct the failure or refusal within 30 days (10 days for monetary defaults) after receiving written notice of default.
Except for monetary defaults, if the default cannot be corrected within 30 days, Developer shall have such additional time to correct the default as reasonably required (not to exceed 90 days) provided that Developer begins taking the actions necessary to correct the default during the 30-day cure period and diligently and in good faith pursues those actions to completion.
Developer will be in default under this Section 13.A.(13) for any failure to materially comply with any of the requirements imposed by this Agreement or otherwise in writing, or to carry out the terms of this Agreement in good faith.
If Developer has received 2 or more notices of default pursuant to this Section 13.A.(13) within the previous 12 months, Chicken Guy shall be entitled to send Developer a notice of termination upon Developer's next default under this Section 13.A.(13) in that 12-month period without providing Developer an opportunity to remedy that default.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, a developer can be in default of their development agreement if they fail to meet their obligations to vendors or suppliers. Specifically, the agreement can be terminated if the developer remains in default beyond the applicable cure period with any vendor or supplier to a franchised restaurant. However, if the default is not by the developer, the developer is given written notice of the default and 30 days to cure it.
Chicken Guy outlines further conditions and potential actions regarding defaults. If a developer fails or refuses to comply with any provision of the agreement or any requirement of the Chicken Guy system, and does not correct the failure within 30 days (or 10 days for monetary defaults) after receiving written notice, it constitutes a default. An exception is made if the default cannot be corrected within 30 days, in which case the developer has additional time (not exceeding 90 days) to correct it, provided they begin corrective actions during the initial 30-day period and diligently pursue them to completion.
Chicken Guy also states that if a developer has received two or more notices of default within a 12-month period, Chicken Guy is entitled to send a notice of termination upon the developer's next default within that same 12-month period, without providing an opportunity to remedy that default. This highlights the importance of addressing and resolving any issues promptly to avoid potential termination of the development agreement. Prospective franchisees should be aware of these default conditions and ensure they have the resources and capabilities to meet their obligations to vendors and suppliers, as well as to comply with all other requirements outlined in the development agreement.