If the Developer for Chicken Guy is an individual or a partnership comprised solely of individuals, what happens to their liability if ownership is transferred for convenience?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) If Developer is an individual, or a partnership comprised solely of individuals, Developer makes the following additional representations and warranties: (a) each individual has executed this Agreement; (b) each individual shall be jointly and severally bound by, and personally liable for the timely and complete performance and a breach of, each and every provision of this Agreement; and (c) notwithstanding any transfer for convenience of ownership pursuant to Section 10.D., each individual shall continue to be jointly and severally bound by, and personally liable for the timely and complete performance and a breach of, each and every provision of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, if the Developer is an individual or a partnership comprised solely of individuals, each individual who executed the Development Agreement remains jointly and severally bound by, and personally liable for, the timely and complete performance and any breach of every provision of the agreement, even after a transfer for convenience of ownership. This means that even if the agreement is transferred to a corporation or limited liability company for ownership convenience, the original individuals remain responsible for all obligations under the agreement.
This condition is significant for potential Chicken Guy developers because it means they cannot escape liability by simply transferring ownership to a corporate entity. The original individuals who signed the agreement remain on the hook, ensuring a strong commitment to the franchise's success and adherence to the agreement's terms. This requirement likely aims to protect Chicken Guy from potential negligence or breaches of contract by ensuring that there are always personally liable parties involved.
This is a stricter requirement than in some other franchise systems, where transferring to a corporate entity might shield the original franchisees from personal liability. Prospective Chicken Guy developers should carefully consider this ongoing personal liability and ensure they are fully prepared to meet all obligations under the Development Agreement, even after a transfer for convenience of ownership.