What happens if there is a change in the Continuity Group for a Chicken Guy franchise?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee is a corporation, a limited liability company or a partnership, the attached Data Sheet lists those persons whom Chicken Guy and Franchisee have designated as Franchisee's "Continuity Group." In the event of any change in the Continuity Group or in the ownership interests of any member of the Continuity Group, Franchisee shall execute addenda to the attached Data Sheet to reflect the change.
If Franchisee is a corporation, the Continuity Group shall at all times own at least 51% of the voting securities of Franchisee; if Franchisee is a limited liability company, the Continuity Group shall at all times own at least 51% of the membership interests in Franchisee; and if Franchisee is a partnership, the Continuity Group shall at all times have at least a 51% interest in the operating profits and losses and at least a 51% ownership interest in Franchisee.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 39–40)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, if there is any change in the Continuity Group or in the ownership interests of any member of the Continuity Group, the franchisee must execute addenda to the attached Data Sheet to reflect the change. The Continuity Group must always maintain a minimum ownership stake. For a corporation, this means owning at least 51% of the voting securities. For a limited liability company, it requires owning at least 51% of the membership interests. And for a partnership, it necessitates having at least a 51% interest in the operating profits and losses, as well as at least a 51% ownership interest.
For a publicly-held entity, changes in ownership interests of members of the Continuity Group require addenda to the Data Sheet. Transfers of ownership interests are subject to Section 19.B if the transfer would result in 50% or more of the voting securities being held by different shareholders than on the date of the first franchise-related agreement between the franchisee and Chicken Guy or its affiliates. This also applies to any change in ownership where an existing shareholder acquires an additional 10% or more of the voting securities, or any change in the membership of the Continuity Group, unless the change is a permitted transfer under Section 19.G.
Certain transfers are permitted without Chicken Guy's prior written approval if the Continuity Group continues to own at least 51% of the voting securities, membership interests, or operating profits and losses/ownership interest, depending on whether the franchisee is a corporation, limited liability company, or partnership, respectively. Additionally, transfers of ownership interests following the death or permanent disability of a person with an ownership interest are permitted without prior approval, provided the transfer is to a parent, adult sibling, spouse, or adult children of that person, or to a member of the Continuity Group, and is completed within six months.