Is Chicken Guy liable to the franchisee if advertising expenditures are not proportionate to contributions in a specific geographic area?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) Franchisee understands and acknowledges that each fund is intended to enhance recognition of the Proprietary Marks and patronage of Chicken Guy! Restaurants. Chicken Guy will endeavor to utilize each fund to develop advertising and marketing materials and programs and to place advertising that will benefit the System and all Chicken Guy! Restaurants contributing to the fund. Franchisee agrees, however, that Chicken Guy is not liable to Franchisee, and Franchisee forever covenants not to sue and holds Chicken Guy harmless of any liability or obligation to ensure that expenditures by each fund in or affecting any geographic area (including the Franchised Location) are proportionate or equivalent to the contributions to the fund by Chicken Guy! Restaurants operating in that geographic area, or that any Chicken Guy! Restaurant will benefit directly or in proportion to its contribution to each fund from the development of advertising and marketing materials or the placement of advertising. Except as expressly provided in this Section 9, neither Chicken Guy nor its designee assumes any direct or indirect liability to Franchisee with respect to the maintenance, direction or administration of each fund.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy is not liable to the franchisee regarding advertising expenditure proportionality. The franchisee acknowledges that advertising funds are intended to enhance the recognition of Chicken Guy restaurants.
Chicken Guy will try to use each fund to develop advertising and marketing materials and programs and to place advertising that will benefit the System and all Chicken Guy restaurants contributing to the fund. However, Chicken Guy is not obligated to ensure that advertising expenditures in any geographic area, including the franchised location, are proportionate or equivalent to the contributions made by Chicken Guy restaurants operating in that area.
The franchisee also agrees not to sue Chicken Guy and holds Chicken Guy harmless from any liability or obligation related to ensuring proportionate expenditures. Chicken Guy does not assume any direct or indirect liability to the franchisee regarding the maintenance, direction, or administration of each fund.