What right does Chicken Guy have as a condition of approving a new supplier proposed by a franchisee?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
Chicken Guy has the right to require, as a condition of its approval, that its representatives be permitted to inspect the supplier's facilities, and that such information, specifications and samples as Chicken Guy reasonably designates be delivered to Chicken Guy and/or to an independent, certified laboratory designated by Chicken Guy for testing prior to granting approval.
A charge not to exceed the Chicken Guy's actual costs of reviewing the supplier or distributor and auditing the facility, if needed, shall be paid by Franchisee.
Chicken Guy will notify Franchisee within 60 days of Franchisee's request as to whether Franchisee is authorized to purchase such products from that supplier.
Chicken Guy reserves the right, at its option, to re-inspect the facilities and products of any such approved supplier and to revoke its approval upon the suppliers' failure to continue to meet any of the foregoing criteria.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Chicken Guy FDD, if a franchisee proposes a new supplier for goods or materials not required to be purchased from Chicken Guy or its designated suppliers, Chicken Guy has specific rights as a condition of approval. Chicken Guy can require that its representatives be allowed to inspect the supplier's facilities. Additionally, Chicken Guy can demand that the supplier provide information, specifications, and samples for testing, either directly to Chicken Guy or to an independent, certified laboratory chosen by Chicken Guy, before granting approval.
Furthermore, the franchisee is responsible for covering Chicken Guy's actual costs for reviewing the proposed supplier, including auditing the facility if necessary. Chicken Guy is obligated to notify the franchisee of its decision within 60 days of the request. Even after initial approval, Chicken Guy retains the right to re-inspect the supplier's facilities and products and can revoke approval if the supplier fails to continue meeting the established criteria.
This process ensures that all suppliers meet Chicken Guy's standards for quality and consistency, protecting the brand's reputation. It also places a financial burden on the franchisee, who must cover the costs associated with the approval process. The franchisee should consider these potential costs and the time required for approval when proposing a new supplier.
This level of control over suppliers is common in franchising to maintain uniformity and quality across all locations. However, the franchisee bears the cost of this quality control, which is an important factor to consider.