Under what circumstances does Chicken Guy have the option to purchase a franchisee's business?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (h) A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor.
This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to purchase the assets of a franchisee on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right to acquire the assets of a franchisee for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c).
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, there are specific conditions under which Chicken Guy may have the right to purchase a franchisee's assets. Chicken Guy has the right of first refusal to purchase the assets of a franchisee on the same terms and conditions as a bona fide third party willing and able to purchase those assets. This means if a franchisee receives a legitimate offer from someone else to buy their business, Chicken Guy has the first opportunity to match that offer and buy the business themselves.
Additionally, Chicken Guy can acquire the assets of a franchisee for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c). This means that if a franchisee violates the terms of their agreement with Chicken Guy and does not fix the problem as required, Chicken Guy can buy the franchisee's business at its fair market value.
It is important to note that a provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor is prohibited. This means Chicken Guy cannot force a franchisee to sell back items that are not specifically branded to Chicken Guy. These stipulations protect the franchisee while also giving Chicken Guy options to regain control of a franchise under certain circumstances.