Can the requirement for members of the Continuity Group and their spouses to sign a guarantee assuming the Chicken Guy franchisee's obligations be waived or modified?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
All members of the Continuity Group and each of their spouses, if applicable, shall jointly and severally guarantee Franchisee's payment and performance under this Agreement and 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.
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, Chicken Guy retains the discretion to waive the requirement for members of the Continuity Group and their spouses to execute the guarantee. However, unless otherwise agreed in writing by Chicken Guy, it is generally their intent to have individuals, rather than entities, act as guarantors. This means that if a 10% Owner is a corporation, Chicken Guy can require individuals with ownership in that corporation to execute the guarantee.
Specifically, all members of the Continuity Group and their spouses must jointly and severally guarantee the franchisee's payment and performance under the Franchise Agreement. This guarantee binds them to the agreement's terms. However, Chicken Guy reserves the right to waive this requirement for some or all individuals. Chicken Guy also retains the right to request personal financial statements from any guarantor at any time.
Furthermore, if the franchisee, any guarantor, or their affiliates hold interests in other Chicken Guy franchises, they must execute a cross-guarantee for the obligations of those restaurants, unless Chicken Guy waives this requirement in writing at its sole discretion. This cross-guarantee ensures that obligations across multiple Chicken Guy franchises are secured.
In the event of a transfer of the franchise, a guarantee of the type required by Section 17.F shall be executed by those individuals identified in Section 17.F.