Does the purchase price for the assets include any value for the Chicken Guy trademark or goodwill?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
Further, the Purchase Price for the Assets shall not contain any factor or increment for any trademark, service mark or other commercial symbol used in connection with the operation of the Franchised Restaurant nor any goodwill or "going concern" value for the Franchised Restaurant.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the purchase price for the assets of a franchised restaurant will not include any value for the Chicken Guy trademark or any goodwill associated with the restaurant. This means that when Chicken Guy exercises its option to purchase the assets of a franchise, the valuation will be based solely on the fair market value of tangible assets like equipment, leasehold improvements, and inventory, without considering the brand recognition or customer loyalty the restaurant may have built.
This policy has significant implications for a franchisee. It means that if Chicken Guy decides to buy back the franchise, the franchisee will not be compensated for the intangible value they may have created through their efforts in building the business's reputation and customer base. The franchisee will only receive compensation for the depreciated value of physical assets.
To determine the fair market value of the assets, Chicken Guy and the franchisee will negotiate. If they cannot agree, they will each select a certified appraiser. If the two appraisals differ by more than 10%, a third appraiser will be selected, and the average of the three appraisals will determine the purchase price. This process ensures a more objective valuation of the assets, but it reinforces that the valuation will be limited to tangible assets only, excluding any value for the Chicken Guy trademark or goodwill.