Under what conditions can Chicken Guy repurchase a franchisee's business?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (h) A provision that requires the franchisee to resell to the franchisor items that are not uniquely identified with the franchisor.
This subdivision does not prohibit a provision that grants to a franchisor a right of first refusal to purchase the assets of a franchisee on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants the franchisor the right to acquire the assets of a franchisee for the market or appraised value of such assets if the franchisee has breached the lawful provisions of the franchise agreement and has failed to cure the breach in the manner provided in subdivision (c).
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, Chicken Guy has the right to acquire a franchisee's assets under specific circumstances. Chicken Guy can repurchase the assets for their market or appraised value if the franchisee has breached the lawful provisions of the franchise agreement. However, the franchisee must have failed to cure the breach in the manner provided in subdivision (c).
Additionally, the FDD states that a franchisor has a right of first refusal to purchase the assets of a franchisee on the same terms and conditions as a bona fide third party willing and able to purchase those assets. This means that if a franchisee receives a legitimate offer from a third party to buy their business, Chicken Guy has the first opportunity to match that offer and repurchase the business themselves.
It is important to note that in California, certain provisions related to franchise agreements may not be enforceable under California law. These include provisions for termination upon bankruptcy, application of Florida laws, choice of forum, covenants not to compete extending beyond termination, liquidated damages clauses, and requirements to sign a general release. Therefore, the specific conditions under which Chicken Guy can repurchase a franchise may be subject to legal limitations and variations depending on the franchisee's location.