Under what conditions is the Addendum mentioned in Item 17 of the Chicken Guy FDD executed?

According to the 2025 Chicken Guy FDD, addenda to the franchise agreement are executed under specific conditions, primarily related to the location of the franchise. For instance, if the offer or sale of a franchise is made in California, if the franchisee is a resident of California, or if the franchised restaurant or its protected area is located in California, an addendum is required. Similar addenda are required for franchisees in Maryland, South Dakota, and Illinois, indicating that these addenda are state-specific and designed to address particular legal or regulatory requirements in those states.

These addenda become an integral part of the franchise or development agreement, modifying the original agreement to comply with state laws. For example, the Maryland addendum addresses issues such as financial assurances required by the Maryland Securities Commissioner, releases, choice of law, choice of venue, and statute of limitations, ensuring that the franchise agreement adheres to Maryland's franchise registration and disclosure laws. Similarly, for South Dakota, Chicken Guy has posted a surety bond in the amount of $50,000.

The inclusion of these addenda ensures that Chicken Guy franchises comply with varying state regulations, protecting both the franchisor and franchisee. Prospective franchisees should carefully review any addenda applicable to their state to understand their rights and obligations under the franchise agreement. These addenda highlight the importance of state-specific legal considerations in franchising and the need for Chicken Guy to adapt its standard agreements accordingly.