Under what conditions can a Chicken Guy franchisee assign the Lease to the Franchisor?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Assignment: Franchisee may assign the Lease to Franchisor, or its designee, with Landlord's consent (which consent shall not be unreasonably withheld) and without payment of any assignment fee or similar charge or increase in any rentals payable to Landlord.
Landlord agrees to consent to Franchisee's collaterally assigning the Lease to Franchisor and granting Franchisor the option, but not the obligation, to assume the Lease from the date Franchisor takes possession of the Leased Premises, without payment of any assignment fee or similar charge or increase in any rentals payable to the landlord.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, a franchisee can assign their lease to Chicken Guy or its designee under specific conditions. The franchisee needs to obtain the landlord's consent for the assignment, but this consent cannot be unreasonably withheld by the landlord. Additionally, the assignment can occur without the franchisee having to pay any assignment fees, similar charges, or increased rental payments to the landlord.
Furthermore, the landlord agrees to consent to the franchisee collaterally assigning the lease to Chicken Guy. This arrangement gives Chicken Guy the option, but not the obligation, to assume the lease from the date Chicken Guy takes possession of the leased premises. This collateral assignment also occurs without any assignment fees, similar charges, or increases in rental payments payable to the landlord.
This provision protects Chicken Guy by ensuring they can take over a restaurant location if a franchisee defaults or leaves the system. For a prospective franchisee, this means that the lease agreement must include terms that allow for easy transfer to Chicken Guy under certain circumstances, which could be beneficial if the franchisee faces difficulties or wants to exit the business, as Chicken Guy can step in and maintain the location's operation.