Under what circumstances are transfer fees collectable for a Chicken Guy franchise transfer?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
franchise and development agreements contain a choice of forum provision. This provision may not be enforceable under California law.
The franchise and development agreements contain a covenant not to compete that extends beyond the termination of the franchise. These provisions may not be enforceable under California law.
The franchise and development agreements contain liquidated damages clauses. Under California Civil Code Section 1671, certain liquidated damages clauses are unenforceable.
You must sign a general release upon execution of the franchise and development agreements, if you transfer the rights granted under those agreements and if you renew your franchise under the franchise agreement. These provisions may not be enforceable under California law. California Corporations Code Section 31512 voids a waiver of your rights under the Franchise Investment Law (California Corporations Code Sections 31000 through 31516). Business and Professions Code Section 21000 voids a waiver of your rights under the Franchise Relations Act (Business and Professions Code Sections 20000 through 20043).
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2025 FDD)
Based on the 2025 Chicken Guy Franchise Disclosure Document, the circumstances under which transfer fees are collectable are not detailed in the provided excerpts. The excerpts do mention transfer-related issues in the context of state laws. For example, in California, franchisees must sign a general release upon transferring rights granted under the franchise and development agreements. However, this provision may not be enforceable under California law. Similarly, in Maryland, any provisions requiring a general release of claims against Chicken Guy upon transfer does not release any claim a franchisee may have under the Maryland Franchise Registration and Disclosure Law.
These clauses primarily address the enforceability of certain provisions related to transfers under specific state laws, particularly concerning general releases and waivers. The excerpts highlight that certain state laws may override the franchise agreement's terms, especially regarding franchisee rights and claims. This suggests that the collection and applicability of transfer fees could be influenced by these state-specific regulations.
However, the excerpts do not provide explicit details on the specific conditions or situations in which Chicken Guy collects transfer fees. A prospective franchisee should consult the full Franchise Agreement and speak with the franchisor directly to understand the exact transfer fee structure, including the amount, conditions for collection, and any potential waivers or reductions. It would also be prudent to seek legal counsel to understand how state laws might impact the transfer process and associated fees.