If a proposed Transfer to a Chicken Guy Developer involves non-cash consideration or intangible benefits, what option does Chicken Guy have?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
If the proposed Transfer provides for payment of consideration other than cash or it involves intangible benefits, Chicken Guy or its designee may elect to purchase the interest proposed to be sold for the reasonable equivalent in cash.
If the parties are unable to agree within 30 days on the reasonable equivalent in cash of the non-cash part of the offer received by Developer, or the cash value of that portion of the offer received by Developer relating to this Agreement, Developer's Franchised Restaurants and those other restaurants, the amount shall be determined by two professionally certified appraisers, Developer selecting one and Chicken Guy or its designee selecting one.
If the amounts set by the two appraisers differ by more than 10%, the two appraisers shall select a third professionally certified appraiser who also shall determine the amount.
The average value set by the appraisers (whether two or three appraisers as the case may be) shall be conclusive and Chicken Guy or its designee may exercise its right of first refusal within 30 days after being advised in writing of the decision of the appraisers.
The cost of the appraisers shall be shared equally by the parties.
- (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.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, if a proposed transfer involves consideration other than cash or includes intangible benefits, Chicken Guy has the option to purchase the interest being sold for a reasonable cash equivalent. This provision protects Chicken Guy's interests by allowing them to maintain control over who becomes a franchisee and ensuring they receive fair value if a transfer occurs using non-monetary forms of payment.
If Chicken Guy and the Developer cannot agree on the cash equivalent within 30 days, the determination will be made by two professionally certified appraisers, one chosen by each party. If the appraisers' valuations differ by more than 10%, a third appraiser will be selected to determine the amount. The average value set by the appraisers will be conclusive, and Chicken Guy has 30 days after being notified of the appraisers' decision to exercise its right of first refusal. The cost of the appraisers is to be shared equally between Chicken Guy and the Developer.
This process ensures a fair valuation of non-cash considerations, reducing the potential for disputes. Even if Chicken Guy declines to exercise its right of first refusal, the Developer cannot transfer the interest at a lower price or on more favorable terms than those offered to Chicken Guy. Chicken Guy retains the right of first refusal again if the transaction does not close within 6 months after Chicken Guy initially declined to exercise its right.