When does the initial term of the Chicken Guy Franchise Agreement expire, assuming no early termination?
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 the 2025 Chicken Guy Franchise Disclosure Document, the initial term of the Franchise Agreement begins when the agreement is signed by Chicken Guy and concludes at midnight on the day before the 10th anniversary of when the franchised restaurant first opened for business. Chicken Guy will provide the franchisee with a notice to confirm the restaurant's opening date. Franchisees do not have the right to cease operations before the initial term expires.
However, there is an exception: 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 of possession loss. But, the franchisee can relocate the restaurant under certain conditions: Chicken Guy approves the new location, the restaurant is rebuilt to system standards, the new restaurant opens within 8 months of losing possession, and the franchisee reimburses Chicken Guy's expenses for approving the new location. If these conditions are met, the initial term does not expire, and no additional franchise or transfer fees are required for the relocation.
It is important to note that the franchise agreement can be terminated earlier under certain conditions, as detailed in Section 22 of the agreement. Prospective franchisees should carefully review the conditions under which early termination may occur, as well as the obligations and potential damages that may arise from such termination.