What are the limitations on transfer fees for a Chicken Guy franchise?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
has posted a surety bond in the amount of $50,000. The bond is on file with the Department of Financial Protection and Innovation.
4. Item 17, Additional Disclosures. The following statements are added to Item 17:
California Business and Professions Code Sections 20000 through 20043 provide rights to you concerning transfer, termination or non-renewal of the franchise and development agreements. If the agreements contain a provision that is inconsistent with the law, the law will control.
The franchise and development agreements provide for termination upon bankruptcy. These provisions may not be enforceable under federal bankruptcy law (11 U.S.C.A. § 101, et seq.).
The franchise and development agreements provide for application of the laws of Florida. This provision may not be enforceable under California law.
The franchise and development agreements contain a choice of forum provision. This provision may not be enforceable under California law.
The franchise and development agreements contain a covenant not to compete that extends beyond the termination of the franchise. These provisions may not be enforceable under California law.
The franchise and development agreements contain liquidated damages clauses. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
You must sign a general release upon execution of the franchise and development agreements, if you transfer the rights granted under those agreements and if you renew your franchise under the franchise agreement. These provisions may not be enforceable under California law. California Corporations Code Section 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code Sections 31000 through 31516). Business and Professions Code Section 21000 voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code Sections 20000 through 20043).
To obtain a liquor license in California, you must apply in-person with the State of California Department of Alcoholic Beverage Control, at your district office ("Department").
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2025 FDD)
Based on the 2025 Chicken Guy Franchise Disclosure Document, there are some limitations regarding transfer fees that prospective franchisees should be aware of, particularly concerning state laws. In California, the FDD states that franchisees must sign a general release upon transferring rights granted under the franchise and development agreements. However, this provision may not be enforceable under California law, as California Corporations Code Section 31512 voids a waiver of rights under the Franchise Investment Law, and Business and Professions Code Section 21000 voids a waiver of rights under the Franchise Relations Act. This means that while Chicken Guy may require a general release, California law might protect the franchisee's rights regardless.
Similarly, in Maryland, any provisions requiring a franchisee to sign a general release of claims against Chicken Guy, including upon the execution of franchise agreements, renewal, or transfer, do not release any claim the franchisee may have under the Maryland Franchise Registration and Disclosure Law. This ensures that franchisees in Maryland retain their rights under state franchise law, even when signing a general release.
In Washington, the FDD states that any provisions contained in the franchise agreement that are inconsistent with state law are void and unenforceable. Specifically, no statement, questionnaire, or acknowledgment signed by a franchisee can waive claims under applicable state franchise law, including fraud in the inducement, or disclaim reliance on any statement made by Chicken Guy or its representatives. This provision supersedes any other term of any document executed in connection with the franchise, providing strong protection for franchisees in Washington. Therefore, prospective Chicken Guy franchisees need to be aware of how state laws may impact the enforceability of certain transfer requirements and general releases.