What is the minimum equity interest an Operating Principal must own in the Chicken Guy franchise, unless waived?
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.
- (e) The Operating Principal shall have at least five years' of full profit and loss responsibility and accountability, with a history of operating at least as many restaurants as Franchisee has agreed to develop under a Chicken Guy! Restaurant Development Agreement, if applicable, or at least one restaurant if Franchisee is only entering into this Agreement.
- (f) Chicken Guy shall have approved the Operating Principal, and not have later withdrawn that approval.
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, an Operating Principal must maintain a minimum equity ownership interest of 10% in the franchise. This requirement can be waived in writing by Chicken Guy. However, this equity ownership requirement does not apply if the franchisee was a publicly-held entity or a wholly-owned subsidiary of a publicly-held entity when the initial franchise agreement was established.
Beyond the equity requirement, the Operating Principal must be part of the Continuity Group and have full control over the day-to-day operations, including the standards and financial performance of the franchised restaurant and any other Chicken Guy franchises operated by the franchisee in the same area. The Operating Principal is expected to dedicate substantial time and effort to supervising these operations and cannot be involved in other business activities that demand significant management responsibilities.
The Operating Principal must also complete the initial manager training program, either the full program or a modified version tailored to their needs, as determined by Chicken Guy. Additionally, the Operating Principal should have at least five years of experience with full profit and loss responsibility, managing at least as many restaurants as the franchisee has agreed to develop, or at least one restaurant if the franchisee is only entering into a single agreement. Chicken Guy must approve the Operating Principal, and this approval cannot be withdrawn later.