Can Chicken Guy waive the cross-guarantee requirement for other restaurants franchised by Chicken Guy or its affiliates?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy has the discretion to waive the cross-guarantee requirement under certain conditions. Specifically, if a franchisee or their affiliates hold interests in other restaurants franchised by Chicken Guy or its affiliates, they are generally required to execute a cross-guarantee to cover all obligations for those restaurants. However, Chicken Guy retains the sole discretion to waive this requirement in writing.
This waiver provision offers some flexibility for franchisees who may have multiple restaurant ventures under the Chicken Guy brand or its affiliates. It means that Chicken Guy can assess the financial situation and relationship of the franchisee with its other ventures and decide whether a cross-guarantee is necessary. This could be beneficial in situations where the franchisee has a strong financial track record or the other ventures are independently stable.
However, it's important to note that the waiver is not guaranteed. Chicken Guy will likely consider various factors before making a decision, such as the franchisee's financial health, the performance of the other restaurants, and the overall risk profile. A prospective franchisee should not assume that a cross-guarantee will be waived and should be prepared to fulfill this requirement if requested. It is advisable to discuss this requirement and the potential for a waiver with Chicken Guy during the franchise application process to understand the specific conditions and criteria they consider.