What is the role of the Operating Principal in overseeing the operations of a Chicken Guy franchise?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
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. For purposes of this Agreement, an affiliate of Franchisee is any company controlled, directly or indirectly, by Franchisee or Franchisee's parent or subsidiary.
G. Operating Principal.
(1) If Franchisee is owned by more than one individual, Franchisee shall designate and retain an individual to serve as the Operating Principal. The Operating Principal as of the date of this Agreement is identified in the attached Data Sheet. Unless waived in writing by Chicken Guy, the Operating Principal shall meet all of the following qualifications:
(a) The Operating Principal, at all times, shall have at least a 10% equity ownership interest in Franchisee. This Section 17.G.(1)(a) shall not apply if Franchisee was a publiclyheld entity or a wholly-owned subsidiary of a publicly-held entity as of the date of the first franchise-related agreement between Franchisee and Chicken Guy.
(b) The Operating Principal, at all times, shall be a member of the Continuity Group and, at a minimum, have full control over the day-to-day activities, including operations, of the Franchised Restaurant and those other restaurants (that are franchised by Chicken Guy or its affiliates) operated by Franchisee in the same geographic area as the Franchised Restaurant, including control over the standards of operation and financial performance.
(c) The Operating Principal shall devote substantial time and adequate efforts to supervising the operation of the Franchised Restaurant and those other restaurants (that are franchised by Chicken Guy or its affiliates) operated by Franchisee in the same geographic area as the Franchised Restaurant and shall not engage in any other business or activity, directly or indirectly, that requires substantial management responsibility.
(d) The Operating Principal shall successfully complete the initial manager training program (either the full initial manager training program or a modified version of the initial manager training program to meet the specific needs of the candidate, as deemed appropriate by Chicken Guy in its sole discretion) and any additional training required by Chicken Guy.
(e) The Operating Principal shall have at least five years' of full profit and loss responsibility and accountability, with a history of operating at least as many restaurants as Franchisee has agreed to develop under a Chicken Guy! Restaurant Development Agreement, if applicable, or at least one restaurant if Franchisee is only entering into this Agreement.
(f) Chicken Guy shall have approved the Operating Principal, and not have later withdrawn that approval.
(2) If the Operating Principal no longer qualifies as such, Franchisee shall designate another qualified person to act as Operating Principal within 30 days after the date the prior Operating Principal ceases to be qualified. Franchisee's designee to become the Operating Principal must successfully complete the initial manager training program.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, if a franchisee is owned by more than one individual, they must designate an Operating Principal. This individual must maintain at least a 10% equity ownership in the franchise, unless the franchisee is a publicly-held entity or a wholly-owned subsidiary of one. The Operating Principal is responsible for the day-to-day activities, including operations, of the franchised restaurant and other Chicken Guy restaurants operated by the franchisee in the same geographic area. This includes control over operational standards and financial performance.
The Operating Principal must devote substantial time and effort to supervising the operation of the Chicken Guy restaurant and related restaurants, and cannot engage in other business activities that demand significant management responsibility. They must also successfully complete the initial manager training program, or a modified version as deemed appropriate by Chicken Guy, along with any additional required training. The Operating Principal, or the franchisee if there is no Operating Principal, must actively oversee the restaurant's operations. This includes regular visits to the restaurant and sufficient communication with Chicken Guy to ensure compliance with operating standards as outlined in the manual or through written or oral communications.
The Operating Principal or a restaurant manager must provide on-site supervision at all times and meet Chicken Guy's training qualifications. The franchisee must employ at least two management personnel who have completed the initial manager training program. If the franchisee falls below this requirement, they have 30 days to hire and enroll replacement personnel in the training program. If the Operating Principal no longer qualifies for the role, the franchisee has 30 days to designate a replacement who must also complete the initial manager training program and execute a guarantee form, unless waived by Chicken Guy. Chicken Guy also has inspection rights to ensure compliance, and may require the Operating Principal to attend additional management training if the restaurant fails an inspection.