Under what grounds can a Chicken Guy franchisee terminate the franchise agreement?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
partment of Financial Protection and Innovation.
4. Item 17, Additional Disclosures. The following statements are added to Item 17:
California Business and Professions Code Sections 20000 through 20043 provide rights to you concerning transfer, termination or non-renewal of the franchise and development agreements. If the agreements contain a provision that is inconsistent with the law, the law will control.
The franchise and development agreements provide for termination upon bankruptcy. These provisions may not be enforceable under federal bankruptcy law (11 U.S.C.A. § 101, et seq.).
The franchise and development agreements provide for application of the laws of Florida. This provision may not be enforceable under California law.
The franchise and development agreements contain a choice of forum provision. This provision may not be enforceable under California law.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2025 FDD)
Based on the 2025 Chicken Guy Franchise Disclosure Document, the grounds for a franchisee to terminate the franchise agreement are not explicitly detailed in the provided excerpts. However, the document does provide some information regarding termination and related rights, particularly concerning specific state laws.
For instance, the FDD mentions that California Business and Professions Code Sections 20000 through 20043 provide rights to franchisees concerning termination. It also notes that franchise and development agreements provide for termination upon bankruptcy, though this may not be enforceable under federal bankruptcy law. For franchisees governed by Minnesota law, Chicken Guy will comply with Minnesota Statute § 80C.14, Subdivision 3, 4, and 5, which requires, except in certain cases, that a franchisee be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice for non-renewal of franchise agreements. Similarly, the Illinois Franchise Disclosure Act outlines franchisee rights upon termination and non-renewal.
Prospective Chicken Guy franchisees should carefully review Item 17 of the FDD and consult with legal counsel to fully understand their termination rights under the franchise agreement and any applicable state laws. It is important to note that certain provisions in the franchise agreement, such as those relating to choice of law, forum, covenants not to compete, liquidated damages, and general releases, may not be enforceable under the laws of certain states like California, New York, Illinois and Washington. Therefore, franchisees should be aware of how local laws impact the enforceability of the franchise agreement.