Does Chicken Guy have the right to revoke its approval of any service provider used by the franchisee?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
brand. Chicken Guy may from time to time modify the list of designated suppliers and/or approved suppliers, and Franchisee shall not, after receipt of such modification in writing, order any proprietary products from a supplier who is no longer a designated supplier or order any goods or materials from a supplier who is no longer an approved supplier.
- (2) Chicken Guy may approve one or more suppliers for any goods or materials and may approve a supplier only as to certain goods or materials. Chicken Guy may concentrate purchases with one or more suppliers to obtain lower prices and/or the best advertising support and/or services for any group of Chicken Guy! Restaurants or any other group of restaurants franchised or operated by Chicken Guy or its affiliates. Approval of a supplier may be conditioned on requirements relating to the frequency of delivery, reporting capabilities, standards of service, including prompt attention to complaints, or other criteria, and concentration of purchases, as set forth above, and may be rescinded or provided on a temporary basis pending a further evaluation of such supplier by Chicken Guy. Chicken Guy may establish commissaries and distribution facilities owned and operated by Chicken Guy or an affiliate that Chicken Guy shall designate as an approved supplier.
- (3) If Franchisee proposes to purchase any goods or materials (that Franchisee is not required to purchase from Chicken Guy, an affiliate of Chicken Guy or a designated supplier) from a supplier that Chicken Guy has not previously approved, Franchisee shall submit to Chicken Guy a written request for such approval, or shall request the supplier to do so itself. 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, Chicken Guy has the right to revoke approval of service providers under certain conditions. Specifically, Chicken Guy reserves the right to re-inspect the facilities and products of any approved supplier and to revoke its approval if the supplier fails to continue meeting Chicken Guy's criteria. This applies to suppliers from whom franchisees propose to purchase goods or materials that they are not required to purchase directly from Chicken Guy or its affiliates.
This means that while franchisees may have some flexibility in choosing suppliers, Chicken Guy retains control over supplier quality and standards. If a franchisee chooses a supplier not already approved by Chicken Guy, the franchisee may incur costs associated with the approval process, including inspections and lab testing. Chicken Guy will notify the franchisee of its decision within 60 days of the request.
Furthermore, Chicken Guy can revoke approval of Credit Card Vendors. Franchisees must use only Credit Card Vendors that Chicken Guy has given prior written approval to or has not revoked earlier approval from. Chicken Guy has the right to modify its requirements and designate additional approved or required methods of payment and vendors for processing such payments, and to revoke its approval of any service provider. Franchisees must comply with all policies and procedures set forth by Chicken Guy in the Manual with respect to these non-cash payment systems.