Does Chicken Guy's right to communicate and counsel with the franchisee and proposed transferee regarding a Chicken Guy franchise transfer create any obligation on Chicken Guy's part?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
Chicken Guy's decision with respect to a proposed Transfer shall not create any liability on the part of Chicken Guy: (a) to the transferee, if Chicken Guy approves the Transfer and the transferee experiences financial difficulties; or (b) to Franchisee or the proposed transferee, if Chicken Guy disapproves the Transfer pursuant to this Section 19 or for other legitimate business purposes.
Chicken Guy, without any liability to Franchisee or the proposed transferee, has the right, in its reasonable business discretion, to communicate and counsel with Franchisee and the proposed transferee regarding any aspect of the proposed Transfer.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy's right to communicate and counsel with the franchisee and proposed transferee regarding a transfer does not create any liability on the part of Chicken Guy to the franchisee or the proposed transferee. This means that Chicken Guy can provide advice and guidance during the transfer process without incurring any legal obligations or responsibilities for the outcome of the transfer.
Specifically, Chicken Guy is not liable to the transferee if it approves the transfer and the transferee subsequently experiences financial difficulties. Similarly, Chicken Guy is not liable to the franchisee or the proposed transferee if it disapproves the transfer, whether due to the conditions outlined in Section 19 of the franchise agreement or for other legitimate business reasons.
This provision protects Chicken Guy from potential claims related to the transfer process and allows them to exercise their business judgment without fear of legal repercussions. For a prospective franchisee, this highlights the importance of conducting thorough due diligence and not relying solely on Chicken Guy's counsel during a transfer, as Chicken Guy's advice does not create any obligation or liability on their part.