Under what circumstances might Chicken Guy conditionally authorize the opening of a franchised location?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. Conditional Opening. Chicken Guy may conditionally authorize Franchisee to open and operate the Franchised Location as a Franchised Restaurant, even though Franchisee has not fully complied with the terms of this Agreement, if Franchisee agrees to fulfill all remaining terms of this Agreement on
or before the Opening Deadline. Chicken Guy's determination as to whether to authorize a conditional opening shall be final and binding and shall be made in its sole discretion based upon those factors that Chicken Guy deems relevant, including its determination that a conditional opening will not be injurious to the reputation of the System. If Franchisee fails to fulfill all remaining terms of this Agreement on or before the Opening Deadline (or such extension thereof as may be granted by Chicken Guy in its sole discretion), this Agreement shall terminate without further action by Chicken Guy, and Franchisee shall take such steps as are required by Section 23.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, Chicken Guy may conditionally authorize a franchisee to open and operate a franchised location even if the franchisee has not fully complied with all the terms of the Franchise Agreement. This conditional authorization is contingent upon the franchisee agreeing to fulfill all remaining obligations by the specified Opening Deadline.
Chicken Guy retains sole discretion in determining whether to grant a conditional opening. This decision is based on factors Chicken Guy deems relevant, with a primary consideration being whether a conditional opening would negatively impact the reputation of the Chicken Guy system. This protects the brand's image and standards even if a franchisee isn't fully compliant at opening.
However, if the franchisee fails to meet all remaining terms of the agreement by the Opening Deadline, or any extension granted at Chicken Guy's discretion, the Franchise Agreement will terminate automatically. In such a case, the franchisee must take steps as required by Section 23 of the agreement, which likely involves ceasing operations and potentially transferring assets back to Chicken Guy. This underscores the importance of meeting all obligations even under a conditional opening to avoid termination of the franchise agreement.