For Hck Hot Chicken, does the definition of 'Assignment' include a transfer by operation of Applicable Law?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
"Assignment" shall mean and refer to any assignment, transfer, gift or other conveyance, voluntarily or involuntarily, in whole or in part, by operation of Applicable Law or otherwise, of any interest in this Development Agreement or any of Area Developer's rights or privileges hereunder or all of any substantial portion of the assets of the Licensed Restaurant, including the lease; provided, further, however, that if Area Developer is an Entity, each of the following shall be deemed to be an Assignment of this Development Agreement: (i) the sale, assignment, transfer, conveyance, gift, pledge, mortgage, hypothecation or other encumbrance of more than forty nine percent (49%) in the aggregate, whether in one or more transactions, of the Equity or voting power of Area Developer, by operation of law or otherwise or any other event(s) or transaction(s) which, directly or indirectly, effectively changes control of Area Developer; (ii) the issuance of any securities by Area Developer which itself or in combination with any other transaction(s) results in the Owners, as constituted on the Effective Date, owning less than fifty one percent (51%) of the outstanding Equity or voting power of Area Developer; (iii) if Area Developer is a Partnership, the resignation, removal, withdrawal, death or legal incapacity of a general partner or of any limited partner owning more than forty nine percent (49%) of the Partnership Rights of the Partnership, or the admission of any additional general partner, or the transfer by any general partner of any of its Partnership Rights in the Partnership, or any change in the ownership or control of any general partner; (iv) the death or legal incapacity of any Owner owning more than forty nine percent (49%) of the Equity or voting power of Area Developer; and (v) any
Source: Item 23 — RECEIPTS (FDD pages 55–245)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, the definition of "Assignment" does include a transfer by operation of Applicable Law.
Specifically, the FDD defines "Assignment" as any transfer or conveyance, whether voluntary or involuntary, that occurs due to the application of laws or other means. This broad definition covers any shift in ownership or rights related to the Development Agreement, regardless of whether it's initiated by the Area Developer or results from legal or regulatory requirements.
For a prospective Hck Hot Chicken Area Developer, this means that any event leading to a transfer of interest in the Development Agreement due to legal or regulatory actions would be considered an assignment. This could include scenarios like a court order, a regulatory ruling, or other legal processes that force a transfer of the Area Developer's rights or assets. The definition also clarifies that certain changes in the ownership or control of the Area Developer entity, such as significant changes in equity or voting power, are also considered assignments, even if they occur by operation of law.