What happens if Chicken Guy fails to exercise its right of first refusal?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) Chicken Guy's failure to exercise its right of first refusal shall not constitute approval of the proposed Transfer nor a waiver of any other provision of this Section 10 with respect to a proposed Transfer.
If Chicken Guy does not exercise its right of first refusal, Developer may not thereafter Transfer the interest at a lower price or on more favorable terms than those that have been offered to Chicken Guy.
Chicken Guy shall again be given a right of first refusal if a transaction does not close within 6 months after Chicken Guy elected not to exercise its right of first refusal.
In no event shall Developer offer the interest for sale or transfer at public auction, nor at any time shall an offer be made to the public to sell, transfer or assign, through any advertisement, either in the newspapers or otherwise, without first having obtained the written approval of Chicken Guy to the auction or advertisement.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, if Chicken Guy chooses not to exercise its right of first refusal regarding a proposed transfer of interest by the developer, this does not automatically mean that Chicken Guy approves the transfer. Furthermore, Chicken Guy's decision not to exercise its right of first refusal does not waive any other rights Chicken Guy has concerning the proposed transfer.
Even if Chicken Guy declines to exercise its right of first refusal, the developer is not allowed to transfer the interest at a lower price or on more favorable terms than those initially offered to Chicken Guy. If the transaction does not proceed within six months after Chicken Guy's decision not to exercise its right of first refusal, Chicken Guy is entitled to another right of first refusal should the developer again seek to transfer the interest.
The agreement explicitly states that the developer cannot offer the interest for sale or transfer at a public auction or through any public advertisement without first obtaining written approval from Chicken Guy. This provision ensures that Chicken Guy maintains control over who becomes involved in the franchise and under what terms, even if they initially waive their right of first refusal.