What standards must a proposed transferee meet to be considered for a Chicken Guy franchise Transfer?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
(1) The proposed transferee (and if the proposed transferee is other than an individual, such owners of an interest in the transferee as Chicken Guy may request) must demonstrate that it has extensive experience in high quality restaurant operations of a character and complexity similar to the restaurants franchised by Chicken Guy or its affiliates; meets the managerial, operational, experience, quality, character and business standards for a franchisee promulgated by Chicken Guy from time to time; possesses a good character, business reputation and credit rating; has an organization whose management culture is compatible with Chicken Guy's management culture; and has adequate financial resources and working capital to meet Franchisee's obligations under this Agreement.
(2) The sales price shall not be so high, in Chicken Guy's reasonable judgment, as to jeopardize the ability of the transferee to develop, maintain, operate and promote the Franchised Restaurant and meet financial obligations to Chicken Guy, third party suppliers and creditors.
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.
- (3) All of Franchisee's accrued monetary obligations to Chicken Guy and its affiliates (whether arising under this Agreement or otherwise) and all other outstanding obligations related to the Franchised Restaurant (including, but not limited to, bills from suppliers, taxes, judgments and any required governmental reports, returns, affidavits or bonds) have been satisfied or, in the reasonable judgment of Chicken Guy, adequately provided for.
Chicken Guy reserves the right to require that a reasonable sum of money be placed in escrow to ensure that all of these obligations are satisfied.
(4) Franchisee is not then in material default of any provision of this Agreement or any other agreement between Franchisee and Chicken Guy or its affiliates, is not in default beyond the applicable cure period under any real estate lease, equipment lease or financing instrument relating to the Franchised Restaurant and is not in default beyond the applicable cure period with any vendor or supplier to the Franchised Restaurant.
(5) Franchisee, all individuals who executed this Agreement and all guarantors of Franchisee's obligations must execute a general release and a covenant not to sue, in a form satisfactory to Chicken Guy, of any and all claims against Chicken Guy and its affiliates and their respective past and present officers, directors, shareholders, agents and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules and ordinances, and claims arising out of, or relating to, this Agreement, any other agreements between Franchisee and Chicken Guy or its affiliates and Franchisee's operation of the Franchised Restaurant and all other restaurants operated by Franchisee that are franchised by Chicken Guy or its affiliates.
(6) Unless waived by Chicken Guy in its reasonable business discretion, the transferee and those employees of the transferee designated by Chicken Guy shall complete the training provided in Sections 12.A.-B.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, a proposed transferee must meet several standards to be considered for a franchise transfer. The transferee (and certain owners, if applicable) must demonstrate extensive experience in high-quality restaurant operations similar to those franchised by Chicken Guy or its affiliates. They must also meet Chicken Guy's managerial, operational, experience, quality, character, and business standards for franchisees, possess a good character, business reputation, and credit rating, and have a compatible management culture. Additionally, the transferee must have adequate financial resources and working capital to meet the obligations of the Franchise Agreement.
The sales price must not be so high that it jeopardizes the transferee's ability to develop, maintain, operate, and promote the franchised restaurant, or to meet financial obligations to Chicken Guy, third-party suppliers, and creditors. All of the franchisee's accrued monetary obligations to Chicken Guy and its affiliates, as well as other outstanding obligations related to the franchised restaurant, must be satisfied or adequately provided for, in Chicken Guy's reasonable judgment. Chicken Guy may require a reasonable sum of money to be placed in escrow to ensure these obligations are met.
Furthermore, the current franchisee must not be in material default of any provision of the Franchise Agreement or any other agreement with Chicken Guy or its affiliates. They must also not be in default beyond the applicable cure period under any real estate lease, equipment lease, or financing instrument related to the franchised restaurant, or with any vendor or supplier. The franchisee, all individuals who executed the agreement, and all guarantors must execute a general release and a covenant not to sue Chicken Guy and its affiliates, covering any and all claims. Unless waived by Chicken Guy, the transferee and designated employees must complete the training provided by Chicken Guy.
These conditions ensure that any potential new franchisee is well-qualified and financially stable, protecting the Chicken Guy brand and the interests of other franchisees. The detailed requirements also give Chicken Guy significant control over who can become a franchisee, maintaining consistency and quality across the franchise system. Prospective franchisees should carefully review these requirements and ensure they can meet them before attempting to transfer a franchise.