Under what conditions are early termination damages payable by a Chicken Guy franchisee?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE(1) | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| Early Termination Damages | Amount of the average weekly Royalty Fees that you owed for the one year period prior to termination, multiplied by the lesser of 104 weeks or the number of weeks remaining in the term of the Franchise Agreement | Within 30 days following the termination | Payable if you default on your obligations and we terminate the Franchise Agreement prior to the expiration of the Initial Term. |
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, early termination damages are payable if a franchisee defaults on their obligations, leading Chicken Guy to terminate the Franchise Agreement before the end of its initial term. The amount of these damages is calculated by multiplying the average weekly royalty fees owed by the franchisee for the one-year period prior to termination by the lesser of 104 weeks or the number of weeks remaining in the term of the Franchise Agreement. This amount is due within 30 days following the termination.
For a prospective Chicken Guy franchisee, this means that failing to meet the obligations outlined in the Franchise Agreement could result in significant financial penalties if Chicken Guy terminates the agreement early. The damages are designed to compensate Chicken Guy for the lost future royalty payments it would have received had the franchisee continued to operate the business for the full term. The calculation method ensures that the damages are proportional to the franchisee's past performance and the remaining duration of the agreement.
It is important for potential franchisees to carefully review the Franchise Agreement to understand what constitutes a default and what obligations must be met to avoid early termination. Understanding these terms can help franchisees mitigate the risk of incurring substantial early termination damages. Franchisees should also be aware that these damages are in addition to any other remedies Chicken Guy may have for breach of contract.