Under what circumstances does Chicken Guy have no liability to the franchisee or proposed transferee after disapproving a Chicken Guy franchise transfer?

According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy's decision regarding a proposed transfer does not create any liability on its part to the franchisee or the proposed transferee if Chicken Guy disapproves the transfer, provided the disapproval is pursuant to Section 19 of the agreement or for other legitimate business purposes. This means that Chicken Guy can reject a transfer application without owing damages to either the current franchisee looking to sell or the potential buyer.

This provision protects Chicken Guy from potential lawsuits or claims arising from their decision to reject a transfer. It gives Chicken Guy the discretion to ensure that any new franchisee meets their standards and is a good fit for the system. Legitimate business purposes could include concerns about the transferee's financial stability, operational experience, or alignment with Chicken Guy's brand values.

It is important for prospective Chicken Guy franchisees to understand that Chicken Guy has broad discretion in approving or disapproving franchise transfers and that they will not be held liable for disapproving a transfer as long as it is for legitimate business reasons or according to Section 19 of the franchise agreement. Franchisees should carefully review Section 19 of the franchise agreement to understand the specific conditions under which a transfer may be disapproved.