Can Chicken Guy terminate the franchise agreement if a franchisee attempts an unapproved Transfer?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) Except as otherwise provided in this Agreement, any purported Transfer, by operation of law or otherwise, not having the prior written consent of Chicken Guy shall be null and void and shall constitute a material breach of this Agreement, for which Chicken Guy may terminate this Agreement without providing Franchisee an opportunity to cure the breach.
(8) Any Transfer that requires Chicken Guy's prior written approval occurs without Franchisee having obtained that prior written approval.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy can terminate the franchise agreement if a franchisee attempts a Transfer without prior written approval. Chicken Guy emphasizes that franchise rights and duties are personal to the franchisee, and the agreement is based on the franchisee's skills, financial capacity, character, and experience. Therefore, any Transfer of interest in the agreement, franchise, restaurant, location, or assets requires Chicken Guy's prior written consent.
If a franchisee attempts a Transfer without obtaining Chicken Guy's approval, it is considered a material breach of the agreement. In such cases, Chicken Guy has the right to terminate the agreement immediately without offering the franchisee an opportunity to correct the breach. This provision underscores the importance Chicken Guy places on controlling who operates its franchises and maintaining consistent standards across all locations.
This policy is fairly standard in the franchise industry, as franchisors typically want to carefully vet and approve any new operators to protect their brand and ensure compliance with their system. Prospective Chicken Guy franchisees should understand that they cannot sell or transfer their franchise without Chicken Guy's consent, and failure to comply with this requirement could result in termination of their franchise agreement.