Under the Chicken Guy Developer Agreement, who in the Continuity Group is required to guarantee the Developer's payment and performance?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
(1) All members of the Continuity Group and each of their spouses, if applicable, shall jointly and severally guarantee Developer's payment and performance under this Agreement and shall bind themselves to the terms of this Agreement pursuant to the attached Guarantee and Assumption of Developer's Obligations ("Guarantee"). Unless Developer is a publicly-held entity, all of Developer's officers, directors and all holders of a legal or beneficial interest in Developer of 10% or more ("10% Owners") and each of their spouses, if applicable, also shall jointly and severally guarantee Developer's payment and performance under this Agreement and also shall bind themselves to the terms of this Agreement pursuant to the attached Guarantee. Notwithstanding the foregoing, Chicken Guy reserves the right, in its sole discretion, to waive the requirement that some or all of the previously described individuals execute the attached Guarantee. Chicken Guy reserves the right to require any guarantor to provide personal financial statements to Chicken Guy from time to time.
- (2) With respect to 10% Owners, Developer acknowledges that, unless otherwise agreed to in writing by Chicken Guy, it is Chicken Guy's intent to have individuals (and not corporations, limited liability companies or other entities) execute the Guarantee. Accordingly, if any 10% Owner is not an individual, Chicken Guy shall have the right to have the Guarantee executed by individuals who have only an indirect ownership interest in Developer. (By way of example, if a 10% Owner of Developer is a corporation, Chicken Guy has the right to require that the Guarantee be executed by individuals who have an ownership interest in that corporation.)
- (3) If Developer, any guarantor or any parent, subsidiary or affiliate of Developer holds any interest in other restaurants that are franchised by Chicken Guy or its affiliates, the party who owns that interest shall execute, concurrently with this Agreement, a form of cross-guarantee to Chicken Guy and its affiliates for the payment of all obligations for such restaurants, unless waived in writing by Chicken Guy in its sole discretion. For purposes of this Agreement, an affiliate of Developer is any company controlled, directly or indirectly, by Developer or Developer's parent or subsidiary.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, all members of the Continuity Group and their spouses, if applicable, are required to jointly and severally guarantee the Developer's payment and performance under the Development Agreement. This guarantee binds them to the terms of the agreement.
In addition to the Continuity Group, all of the Developer's officers, directors, and those holding a legal or beneficial interest of 10% or more (referred to as "10% Owners") and their spouses, if applicable, must also jointly and severally guarantee the Developer's payment and performance. This requirement does not apply if the Developer is a publicly-held entity. However, Chicken Guy retains the right to waive the guarantee requirement for some or all of these individuals at its discretion. Chicken Guy can also request personal financial statements from any guarantor.
For 10% Owners who are not individuals (e.g., corporations or LLCs), Chicken Guy has the right to require individuals with an indirect ownership interest in the Developer to execute the guarantee. For example, if a corporation owns 10% of the Developer, Chicken Guy can require individuals with ownership in that corporation to provide the guarantee. This ensures that personal accountability is maintained even when ownership is held through business entities.
If the Developer, any guarantor, or any parent, subsidiary, or affiliate of the Developer holds an interest in other Chicken Guy franchises, they must execute a cross-guarantee to cover the obligations of all such restaurants, unless Chicken Guy waives this requirement in writing. This provision ensures that financial obligations across multiple Chicken Guy locations are secured, providing additional protection for Chicken Guy.