What happens to the monies in a Chicken Guy advertising fund upon termination?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
(3) Chicken Guy reserves the right, in its sole discretion, to: (a) suspend contributions to and operations of each fund for one or more periods that it determines to be appropriate; (b) terminate any fund upon 30 days' written notice to Franchisee and establish, if Chicken Guy so elects, one or more new advertising funds; and (c) defer or waive, in whole or in part, upon the written request of any franchised or company restaurants, any advertising fees required by this Section if, in Chicken Guy's sole judgment, there has been demonstrated unique, objective circumstances justifying any such waiver or deferral. On termination of a fund, all monies in the fund shall be spent for advertising and/or promotional purposes. Chicken Guy has the right to reinstate any fund upon the same terms and conditions set forth in this Agreement upon 30 days' prior written notice to Franchisee.
(3) Chicken Guy or its designee shall have the right to terminate (and subsequently restart) the Regional Co-op or convert the Regional Co-op to a Regional Advertising Fund. Upon termination, all monies in the Regional Co-op shall be spent for advertising and/or promotional purposes.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, upon termination of an advertising fund, all monies in the fund must be spent for advertising and/or promotional purposes. This applies to both the Brand Fund and any Regional Co-op funds. Chicken Guy retains the right to terminate any fund with 30 days' written notice to the franchisee and can establish new advertising funds if it chooses.
This means that if a Chicken Guy advertising fund is terminated, franchisees will not receive a refund of their contributions. Instead, the remaining funds will be used for advertising and promotional activities to benefit the Chicken Guy system as a whole. This is a fairly standard practice in franchising, as advertising funds are typically intended for the collective benefit of all franchisees.
Chicken Guy also has the discretion to suspend contributions to and operations of each fund, or defer/waive advertising fees under unique circumstances. Furthermore, Chicken Guy can transfer monies between the Brand Fund and Regional Advertising Funds to maximize media effectiveness. These stipulations provide Chicken Guy with flexibility in managing the advertising funds and responding to changing market conditions.
Prospective franchisees should consider these terms carefully, understanding that contributions to the advertising funds are not guaranteed to directly benefit their specific location and that the funds will be used for advertising and promotional purposes even upon termination of the fund.