Are Chicken Guy managers required to own an equity interest in the franchise?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) If Franchisee is owned by more than one individual, Franchisee shall designate and retain an individual to serve as the Operating Principal. The Operating Principal as of the date of this Agreement is identified in the attached Data Sheet. Unless waived in writing by Chicken Guy, the Operating Principal shall meet all of the following qualifications:
- (a) The Operating Principal, at all times, shall have at least a 10% equity ownership interest in Franchisee. This Section 17.G.(1)(a) shall not apply if Franchisee was a publiclyheld entity or a wholly-owned subsidiary of a publicly-held entity as of the date of the first franchise-related agreement between Franchisee and Chicken Guy.
- (b) The Operating Principal, at all times, shall be a member of the Continuity Group and, at a minimum, have full control over the day-to-day activities, including operations, of the Franchised Restaurant and those other restaurants (that are franchised by Chicken Guy or its affiliates) operated by Franchisee in the same geographic area as the Franchised Restaurant, including control over the standards of operation and financial performance.
- (c) The Operating Principal shall devote substantial time and adequate efforts to supervising the operation of the Franchised Restaurant and those other restaurants (that are franchised by Chicken Guy or its affiliates) operated by Franchisee in the same geographic area as the Franchised Restaurant and shall not engage in any other business or activity, directly or indirectly, that requires substantial management responsibility.
- (d) The Operating Principal shall successfully complete the initial manager training program (either the full initial manager training program or a modified version of the initial manager training program to meet the specific needs of the candidate, as deemed appropriate by Chicken Guy in its sole discretion) and any additional training required by Chicken Guy.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 39–40)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, while general managers are not explicitly required to own equity, the Operating Principal must have at least a 10% equity ownership interest in the franchise. This requirement, detailed in Section 17.G.(1)(a) of the Restaurant Franchise Agreement, applies if the franchisee is owned by more than one individual. However, this equity requirement is waived if the franchisee was a publicly-held entity or a wholly-owned subsidiary of a publicly-held entity on the date of the first franchise-related agreement with Chicken Guy.
The Operating Principal must also be part of the Continuity Group, maintaining control over the day-to-day operations, standards, and financial performance of the franchised restaurant and any other Chicken Guy franchises operated by the franchisee in the same area. They must devote substantial time and effort to supervising these operations and cannot engage in other business activities that demand significant management responsibility.
Furthermore, the Operating Principal is required to successfully complete Chicken Guy's initial manager training program, or a modified version tailored to their needs, as determined by Chicken Guy. This ensures that the individual in charge has the necessary skills and knowledge to manage the franchise effectively. These stipulations ensure that Chicken Guy maintains a certain level of control and involvement from the franchisee's leadership, aligning with common practices in the franchise industry to protect brand standards and operational consistency.