In Michigan, under what conditions can Chicken Guy terminate a franchise agreement before its expiration?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
(iv) The failure of the franchisee or proposed transferee to pay any sums owing to the franchisor or to cure any default in the franchise agreement existing at the time of the proposed transfer.
(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).
- (i) A provision which permits the franchisor to directly or indirectly convey, assign, or otherwise transfer its obligations to fulfill contractual obligations to the franchisee unless provision has been made for providing the required contractual services.
THE FACT THERE IS A NOTICE OF THIS OFFERING ON FILE WITH THE ATTORNEY GENERAL DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION, OR ENDORSEMENT BY THE ATTORNEY GENERAL.
Any questions regarding this Notice shall be directed to the Department of Attorney General, Corporate Oversight Division, Franchise Section, 525 West Ottawa Street, Lansing, Michigan 48913, (517) 373-7117.
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, there are specific stipulations regarding the termination of a franchise agreement in Michigan. The FDD stipulates that a Chicken Guy franchise can be terminated if the franchisee fails to pay any owed sums or does not rectify any defaults present in the franchise agreement at the time of a proposed transfer.
Additionally, Michigan law includes provisions to protect franchisees. Specifically, the inclusion of a clause that mandates a franchisee to resell items not uniquely identified with Chicken Guy back to the franchisor is prohibited. However, Chicken Guy retains the right of first refusal to acquire the franchisee's assets if a third party makes a legitimate offer. Chicken Guy can also acquire the assets at market or appraised value if the franchisee breaches the franchise agreement and fails to correct the breach as specified.
Furthermore, Chicken Guy cannot directly or indirectly transfer its contractual obligations to the franchisee unless arrangements are in place to ensure the required contractual services are still provided. Any questions regarding the notice should be directed to the Department of Attorney General, Corporate Oversight Division, Franchise Section, in Lansing, Michigan.