Must the Operating Principal for a Chicken Guy franchise be acceptable to both the franchisee and the franchisor?
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.
- (2) If the Operating Principal no longer qualifies as such, Franchisee shall designate another qualified person to act as Operating Principal within 30 days after the date the prior Operating Principal ceases to be qualified. Franchisee's designee to become the Operating Principal must successfully complete the initial manager training program. Following Chicken Guy's approval of a new Operating Principal, that person shall execute the attached form of Guarantee unless waived by Chicken Guy in its sole discretion.
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 the 2025 Chicken Guy Franchise Disclosure Document, if a franchisee is owned by more than one individual, they must designate an Operating Principal. This Operating Principal must be approved by Chicken Guy and that approval cannot be withdrawn later. If the Operating Principal no longer qualifies, the franchisee has 30 days to designate another qualified person, who must also complete the initial manager training program and be approved by Chicken Guy.
The Operating Principal must meet several qualifications, including having at least a 10% equity ownership in the franchisee, unless the franchisee was a publicly-held entity or a wholly-owned subsidiary of a publicly-held entity at the time of the first franchise agreement. The Operating Principal must also be a member of the Continuity Group and have full control over the day-to-day activities and operations of the franchised restaurant, including financial performance and standards of operation. They must also devote substantial time and effort to supervising the restaurant and not engage in other business activities that require significant management responsibility.
In addition, the Operating Principal must have at least five years of full profit and loss responsibility and accountability, with a history of operating at least as many restaurants as the franchisee has agreed to develop under a Restaurant Development Agreement, or at least one restaurant if the franchisee is only entering into the current agreement. These requirements ensure that the Operating Principal has the necessary experience and commitment to effectively manage the Chicken Guy franchise.
This requirement ensures that Chicken Guy maintains a level of control over the management and operation of its franchises, safeguarding brand standards and consistency across all locations. For a prospective franchisee, this means that the choice of Operating Principal is not solely their decision, and they must present a candidate who meets Chicken Guy's criteria and is approved by them.