What representations and warranties is Chicken Guy entitled to when exercising its option to purchase assets?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
Chicken Guy or its assignee shall be entitled to all customary representations and warranties that the Assets are free and clear (or, if not, accurate and complete disclosure) as to: (1) ownership, condition and title; (2) liens and encumbrances; (3) environmental and hazardous substances; and (4) validity of contracts and liabilities inuring to Chicken Guy or affecting the Assets, whether contingent or otherwise.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, when Chicken Guy exercises its option to purchase assets, it is entitled to customary representations and warranties that the assets are free and clear. If they are not free and clear, Chicken Guy is entitled to accurate and complete disclosure regarding specific aspects of the assets.
These aspects include ownership, condition, and title to the assets. Chicken Guy is also entitled to representations and warranties regarding any liens and encumbrances on the assets. Furthermore, Chicken Guy is entitled to information on environmental and hazardous substances related to the assets. Finally, Chicken Guy is entitled to representations and warranties regarding the validity of contracts inuring to the purchaser or affecting the assets, whether contingent or otherwise.
This means that a prospective Chicken Guy franchisee should maintain meticulous records and be prepared to fully disclose all relevant information about the restaurant's assets if Chicken Guy decides to exercise its purchase option. Failure to provide accurate and complete disclosures could lead to legal issues or disputes during the asset purchase process.