Under what conditions can Chicken Guy disapprove a transfer based on the sales price?

According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy can disapprove a transfer if, in its reasonable judgment, the sales price is too high. Specifically, Chicken Guy may disapprove a transfer if the sales price jeopardizes the transferee's ability to develop, maintain, operate, and promote the franchised restaurants. This also includes the transferee's ability to meet financial obligations to Chicken Guy, third-party suppliers, and creditors.

This provision protects the Chicken Guy system by ensuring that new franchisees are not burdened with excessive debt from the outset. A high sales price could strain the financial resources of the new franchisee, potentially leading to underperformance or even failure. This could negatively impact the Chicken Guy brand and the performance of other franchisees in the system.

For a prospective Chicken Guy franchisee, this means that the franchisor has some control over the valuation of the business during a transfer. While a franchisee is free to negotiate a sale price with a potential buyer, Chicken Guy can step in if it believes the price is unsustainable for the new owner. This could potentially limit the seller's profit, but it also provides some assurance that the buyer is financially sound and capable of running the franchise successfully.

It is important to note that Chicken Guy's judgment must be reasonable. The FDD indicates that Chicken Guy's decision will consider numerous factors deemed relevant by Chicken Guy. This suggests that Chicken Guy cannot arbitrarily reject a transfer based on price alone but must have a legitimate business reason for doing so. Franchisees should seek legal counsel if they believe Chicken Guy is unfairly interfering with a transfer.