Who is required to act as a Guarantor for a Chicken Guy franchise agreement?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
officers, directors and all holders of a legal or beneficial interest in Franchisee of 10% or more ("10% Owners") and each of their spouses, if applicable, also shall jointly and severally guarantee Franchisee's payment and performance under this Agreement and also shall bind themselves to the terms of this Agreement pursuant to the attached Guarantee. Notwithstanding the foregoing, Chicken Guy reserves the right, in its sole discretion, to waive the requirement that some or all of the previously described individuals execute the attached Guarantee. Chicken Guy reserves the right to require any guarantor to provide personal financial statements to Chicken Guy from time to time.
- (2) With respect to 10% Owners, Franchisee acknowledges that, unless otherwise agreed to in writing by Chicken Guy, it is Chicken Guy's intent to have individuals (and not corporations, limited liability companies or other entities) execute the Guarantee. Accordingly, if any 10% Owner is not an individual, Chicken Guy shall have the right to have the Guarantee executed by individuals who have only an indirect ownership interest in Franchisee. (By way of example, if a 10% Owner of Franchisee is a corporation, Chicken Guy has the right to require that the Guarantee be executed by individuals who have an ownership interest in that corporation.)
- (3) If Franchisee, any guarantor or any parent, subsidiary or affiliate of Franchisee holds any interest in other restaurants that are franchised by Chicken Guy or its affiliates, the party who owns that interest shall execute, concurrently with this Agreement, a form of cross-guarantee to Chicken Guy and its affiliates for the payment of all obligations for such restaurants, unless waived in writing by Chicken Guy in its sole discretion. For purposes of this Agreement, an affiliate of Franchisee is any company controlled, directly or indirectly, by Franchisee or Franchisee's parent or subsidiary.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, the individuals required to act as guarantors for a franchisee's obligations include the officers, directors, and all holders of a legal or beneficial interest of 10% or more in the franchisee (referred to as "10% Owners"), along with their spouses, if applicable. These individuals must jointly and severally guarantee the franchisee's payment and performance under the Franchise Agreement and also bind themselves to the terms of the agreement through the attached Guarantee. However, Chicken Guy retains the right to waive this requirement for some or all of these individuals at its discretion. Chicken Guy also reserves the right to request personal financial statements from any guarantor periodically.
For 10% Owners who are not individuals (e.g., corporations or limited liability companies), Chicken Guy has the right to require that the Guarantee be executed by individuals who have an indirect ownership interest in the franchisee. For example, if a corporation is a 10% Owner, Chicken Guy can require individuals with ownership in that corporation to execute the Guarantee. This ensures that individuals ultimately back the financial obligations, rather than just entities.
Furthermore, if the franchisee, any guarantor, or any parent, subsidiary, or affiliate of the franchisee holds an interest in other restaurants franchised by Chicken Guy or its affiliates, the party owning that interest must execute a cross-guarantee to Chicken Guy and its affiliates. This cross-guarantee covers the payment of all obligations for such restaurants, unless Chicken Guy waives this requirement in writing. This provision aims to protect Chicken Guy from financial risks across multiple franchise locations owned by the same individuals or entities.