In Michigan, what items is Chicken Guy NOT required to compensate a franchisee for upon non-renewal of the franchise agreement?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (h) A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor.
This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to purchase the assets of a franchisee on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right to acquire the assets of a franchisee for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c).
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2025 FDD)
According to the 2025 Chicken Guy FDD, in Michigan, Chicken Guy is not required to compensate a franchisee for items that are not uniquely identified with the franchisor if the franchise agreement is not renewed. However, this does not prevent Chicken Guy from having the first right of refusal to purchase the franchisee's assets if a third party is willing to buy them. Chicken Guy can also acquire the franchisee's assets at market or appraised value if the franchisee has violated the franchise agreement and failed to fix the issue.
This means that if a Chicken Guy franchisee in Michigan has standard restaurant equipment or supplies that aren't specific to the Chicken Guy brand, they may not be able to sell those items back to Chicken Guy for compensation when the franchise agreement ends. This could leave the franchisee responsible for disposing of or selling those assets themselves.
It is important for prospective franchisees to understand the terms of asset repurchase upon non-renewal, as it can significantly impact their potential losses when exiting the franchise system. Franchisees should carefully evaluate the types of assets they will be acquiring and their potential resale value in the event of non-renewal.