Under what circumstances does the Washington Addendum apply to a Chicken Guy franchise?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 17: RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION]
As a result, any such provisions contained in the franchise agreement or elsewhere are void and unenforceable in Washington.
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- Questionnaires and Acknowledgments. No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor.
This provision supersedes any other term of any document executed in connection with the franchise.
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- Prohibitions on Communicating with Regulators. Any provision in the franchise agreement or related agreements that prohibits the franchisee from communicating with or complaining to regulators is inconsistent with the express instructions in the Franchise Disclosure Document and is unlawful under RCW 19.100.180(2)(h).
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- Advisory Regarding Franchise Brokers. Under the Washington Franchise Investment Protection Act, a "franchise broker" is defined as a person that engages in the business of the offer or sale of franchises. A franchise broker represents the franchisor and is paid a fee for referring prospects to the franchisor and/or selling the franchise. If a franchisee is working with a franchise broker, franchisees are advised to carefully evaluate any information provided by the franchise broker about a franchise.
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- Surety Bond. The following language is added to the end of Section 7.A. of the Franchise Agreement:
A surety bond in the amount of $100,000 has been obtained by Chicken Guy. The Washington Securities Division has made the issuance of Chicken Guy's permit contingent upon Chicken Guy maintaining surety bond coverage acceptable to the Administrator until (a) all Washington franchisees have (i) received all initial training that they are entitled to under the Franchise Agreement or Chicken Guy's franchise disclosure document, and (ii) are open for business; or (b) the Administrator issues written authorization to the contrary.
Except as expressly modified by this Addendum, the Franchise Agreement remains unmodified and in full force and effect.
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, the Washington Addendum to the Franchise Agreement is applicable under specific conditions related to the franchise's location and the franchisee's activities within Washington state. This addendum modifies certain aspects of the standard Franchise Agreement to comply with Washington law.
Specifically, certain provisions in the franchise agreement or related agreements that restrict a franchisee from communicating with regulators are considered void and unenforceable in Washington. This ensures that franchisees can freely report issues or complaints to regulatory bodies without fear of reprisal. Additionally, any statements, questionnaires, or acknowledgments signed by a franchisee cannot waive claims under state franchise law, including those related to fraud, or disclaim reliance on statements made by Chicken Guy or its representatives. This protects franchisees from unknowingly relinquishing their legal rights.
Furthermore, the Washington Securities Division requires Chicken Guy to maintain a surety bond of $100,000. This bond is contingent upon Chicken Guy ensuring that all Washington franchisees receive initial training and are open for business, or until the Administrator provides written authorization to the contrary. This bond serves as a financial guarantee to protect franchisees in Washington.
Prospective Chicken Guy franchisees in Washington should carefully review the Washington Addendum to understand their rights and obligations under state law. They should also be aware of the role of franchise brokers and evaluate any information provided by them, as these brokers represent the franchisor and are paid a fee for their services.