Under what circumstances related to other restaurants franchised by Chicken Guy or its affiliates is a cross-guarantee required?

According to Chicken Guy's 2025 Franchise Disclosure Document, a cross-guarantee is required if a franchisee, any guarantor, or any parent, subsidiary, or affiliate of the franchisee holds an interest in other restaurants franchised by Chicken Guy or its affiliates. In such cases, the party owning that interest must execute a cross-guarantee to Chicken Guy and its affiliates, ensuring the payment of all obligations for those restaurants. However, Chicken Guy retains the discretion to waive this requirement in writing. An affiliate of the franchisee is defined as any company controlled directly or indirectly by the franchisee or the franchisee's parent or subsidiary.

This cross-guarantee provision means that if a franchisee or related entity has ownership in multiple Chicken Guy franchises or other franchises affiliated with Chicken Guy, they are essentially guaranteeing the financial obligations of all those restaurants. This is a significant risk consideration for prospective franchisees who may already have or plan to acquire interests in multiple franchise locations. If one location experiences financial difficulties, the cross-guarantee could expose the franchisee's other assets and business interests to liability.

It is important for potential Chicken Guy franchisees to carefully evaluate their existing business interests and future expansion plans in relation to this cross-guarantee requirement. They should also discuss with Chicken Guy the possibility of obtaining a written waiver of this requirement, especially if they have concerns about the potential financial exposure. Understanding the full scope of this obligation is crucial before entering into a franchise agreement with Chicken Guy.