What costs must a Hck Hot Chicken franchisee reimburse the franchisor for in connection with a transfer?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Area Development Agreement | Summary |
|---|---|---|
| may continue to own and operate all Restaurants pursuant to then | ||
| j. Assignment of contract | Section 7.1 | existing Franchise Agreements. No restriction on our right to assign. |
| by Us | ||
| k. "Transfer" by you - | Section 7.3 | Includes transfer of the agreement or change in ownership of a |
| definition | franchisee which is an entity. | |
| l. Our approval of transfer | Section 7.3 | Transfers require our express written consent, which consent may |
| by you | be withheld for any reason whatsoever in our sole judgment. | |
| m. Conditions for our approval of transfer | Sections 7.2 and 7.3 | Except as described below, you may not transfer your Area Development Agreement or any Franchise Agreement signed pursuant to the Area Development Agreement except with our written consent and a simultaneous assignment of the Area Development Agreement and all Franchise Agreements signed pursuant to the Area Development Agreement to the same assignee. With our written consent, you may transfer a Franchise Agreement to an entity of which you directly own 100% interest for convenience of ownership. If the new franchisee is a business entity, all holders of a 10% or greater interest in the new franchisee must sign a Continuing Guaranty. You must reimburse us for all costs and expenses that we incur in connection with such a transfer, including attorneys' fees. At our election, the assignee must sign our then-current form of Franchise Agreement for each Restaurant then developed or under development. Before shares of a Franchisee which is a business entity may be offered by private offering, you must provide us with copies of all offering materials; indemnify us, our officers, directors, shareholders, partners, agents, representatives, independent contractors, and employees of each in connection with the offering; and pay us a non- refundable fee of 50% of our then current Initial Franchise Fee or a greater amount, if necessary, to reimburse us for our costs and expenses associated with reviewing the proposed offering. |
| n. Our right of first refusal to acquire your business | Section 7.3 | We have 30 days to match any offer for your HCK Hot Chicken Restaurant. |
| o. Our option to purchase | N/A | Not applicable. |
| your business | ||
| p. Your death or disability | Section 9.1.2 | Your heirs have nine months after your death or legal incapacity to assign the Area Development Agreement to a person acceptable to us. See also "m" above. |
| q. |
Source: Item 17 — RENEWAL, TERMINATIONS, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, a franchisee who transfers their franchise must reimburse Hck Hot Chicken for specific costs incurred during the transfer process. These reimbursable costs include all costs and expenses Hck Hot Chicken incurs, explicitly mentioning attorneys' fees.
This means that if a franchisee decides to sell their Hck Hot Chicken franchise to a new owner, they are responsible for covering Hck Hot Chicken's expenses related to the transfer. These expenses can include legal fees for reviewing the transfer documents, assessing the new franchisee, and ensuring the transfer complies with the franchise agreement. The franchisee is responsible for these costs regardless of whether the transfer is to an individual, a partnership, or a corporation.
This provision is relatively standard in franchising, as franchisors want to ensure they do not bear the financial burden of a franchisee's decision to transfer ownership. It is important for a prospective Hck Hot Chicken franchisee to understand these potential costs upfront, as they can significantly impact the financial implications of selling their franchise in the future. Franchisees should factor in these potential reimbursement costs when considering a transfer.