What are the restrictions on the Developer if Chicken Guy does not exercise its right of first refusal?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) Chicken Guy's failure to exercise its right of first refusal shall not constitute approval of the proposed Transfer nor a waiver of any other provision of this Section 10 with respect to a proposed Transfer.
If Chicken Guy does not exercise its right of first refusal, Developer may not thereafter Transfer the interest at a lower price or on more favorable terms than those that have been offered to Chicken Guy.
Chicken Guy shall again be given a right of first refusal if a transaction does not close within 6 months after Chicken Guy elected not to exercise its right of first refusal.
In no event shall Developer offer the interest for sale or transfer at public auction, nor at any time shall an offer be made to the public to sell, transfer or assign, through any advertisement, either in the newspapers or otherwise, without first having obtained the written approval of Chicken Guy to the auction or advertisement.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, if Chicken Guy chooses not to exercise its right of first refusal regarding a proposed transfer by the Developer, the Developer faces specific restrictions. The Developer cannot transfer the interest at a lower price or on more favorable terms than those initially offered to Chicken Guy. This ensures that the Developer cannot use Chicken Guy's refusal as an opportunity to seek a better deal elsewhere, maintaining the integrity of the initial offer presented to Chicken Guy.
Furthermore, Chicken Guy retains the right of first refusal if the transfer transaction does not close within six months after Chicken Guy declined to exercise its right. This prevents the Developer from indefinitely holding the option open with another party after Chicken Guy's initial refusal, giving Chicken Guy another opportunity to reconsider if the deal falls through or is significantly delayed.
Additionally, the Developer is prohibited from offering the interest for sale or transfer at a public auction or making any public offers through advertisements without first obtaining written approval from Chicken Guy. This restriction ensures that the Developer does not use public methods to solicit offers without Chicken Guy's consent, maintaining control over how the transfer is handled and preventing potential damage to the Chicken Guy brand or reputation.