When does the initial term of the Chicken Guy Franchise Agreement expire?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Initial Term.
- (1) The initial term of this Agreement ("Initial Term") and the Franchise granted by this Agreement shall begin on the date this Agreement is signed by Chicken Guy and expire at midnight on the day preceding the 10th anniversary of the date the Franchised Restaurant first opened for business, unless this Agreement is terminated at an earlier date pursuant to Section 22. (Chicken Guy shall complete and forward to Franchisee a notice, in a form substantially similar to attached Rider 1, to memorialize the date the Franchised Restaurant first opened for business.) Except as described in the next paragraph, Franchisee acknowledges that it does not have the unilateral right to cease operating the Franchised Restaurant prior to the expiration of the Initial Term.
- (2) Notwithstanding the foregoing, if, during the term of this Agreement, Franchisee, through no act or failure to act on its part (except the failure to extend the lease for the Franchised Location through the Initial Term of this Agreement), loses the right to possession of the Franchised Location, the Initial Term shall expire as of the date of Franchisee's loss of the right to possession. If the right to possession is lost through no act or failure to act on Franchisee's part however, Franchisee may relocate the Franchised Restaurant (without paying any additional initial franchise fee or transfer fee) at its expense, and the Initial Term shall not expire if: (a) Chicken Guy approves the new location; (b) Franchisee
constructs and equips a Franchised Restaurant at the new location in accordance with the then-current System standards and specifications; (c) a Franchised Restaurant at the new location is open to the public for business within 8 months after Franchisee's loss of possession of the Franchised Location; and (d) Franchisee reimburses Chicken Guy for all reasonable expenses actually incurred by Chicken Guy in connection with the approval of the new location.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the initial term of the Franchise Agreement begins when the agreement is signed by Chicken Guy. The initial term expires at midnight on the day preceding the 10th anniversary of the date the franchised restaurant first opened for business. Chicken Guy will provide the franchisee with a notice to confirm the restaurant's opening date.
There is an exception to the standard 10-year term. If the franchisee loses possession of the franchised location through no fault of their own (excluding failure to extend the lease), the initial term will expire on the date they lose possession. However, the franchisee may relocate the restaurant under certain conditions: Chicken Guy approves the new location, the franchisee constructs a restaurant at the new location according to Chicken Guy's standards, the new restaurant opens within 8 months of losing possession, and the franchisee reimburses Chicken Guy for expenses related to the new location approval. If these conditions are met, the initial term does not expire.
Franchise agreements typically have an initial term of 10-20 years, so Chicken Guy's initial term is on the shorter end. It is important for a prospective franchisee to understand the expiration date of their initial term, as well as the conditions for renewal, as this dictates the length of time they are guaranteed to operate the franchise.