How does the Hck Hot Chicken Development Agreement define "Assignment"?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
7.3.1 This Development Agreement has been entered into by Franchisor in reliance upon and in consideration of the singular personal skill, qualifications and trust and confidence reposed in Area Developer. Neither Area Developer nor any Owner shall cause or permit any Assignment unless Area Developer shall have obtained Franchisor's prior written consent, which consent may be withheld for any reason whatsoever in Franchisor's judgment, and shall comply with Franchisor's right of first refusal pursuant to Section 7.3.4. Except as provided in Section 7.2.2, Area Developer acknowledges and agrees that it will not be permitted to make an Assignment of this Development Agreement or sell, gift, convey, assign or transfer the assets used in any of the Restaurants developed hereunder or any Franchise Agreement executed pursuant to this Development Agreement except in conjunction with a concurrent Assignment to the same approved assignee of all of the assets used in all of said Restaurants, and all of the Franchise
Agreements executed pursuant to this Development Agreement or at Franchisor's election the execution by the assignee of new Franchise Agreements on Franchisor's Then-current form for each of the Restaurants then developed or under development by Area Developer, and otherwise in accordance with the terms and conditions of Area Developer's Franchise Agreement(s). If Area Developer is an Entity, Area Developer shall promptly provide Franchisor with written notice (stating such information as Franchisor may from time to time require) of each and every transfer, assignment, encumbrance, gift and other conveyance, voluntarily or involuntarily, in whole or in part, by operation of Applicable Law or otherwise by any Owner of any direct or indirect Equity or voting rights in Area Developer, notwithstanding that the same may not constitute an "Assignment" as defined by this Development Agreement.
- 7.3.2 Area Developer shall not, directly or indirectly, pledge, encumber, hypothecate or otherwise grant any third party a security interest in this Development Agreement in any manner whatsoever without the prior express written consent of Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 55–245)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Area Development Agreement, an assignment by the Area Developer requires the Franchisor's prior written consent, which may be withheld for any reason. The agreement emphasizes that it was entered into based on the Area Developer's unique skills, qualifications, trust, and confidence.
The Area Developer cannot assign the Development Agreement or transfer assets from the restaurants developed under it, or any Franchise Agreement, unless it's done with a concurrent assignment to the same approved assignee of all assets used in all restaurants. Alternatively, at Hck Hot Chicken's election, the assignee can execute new Franchise Agreements on the then-current form for each restaurant developed or under development by the Area Developer, following the terms of the Area Developer's Franchise Agreement(s).
Furthermore, if the Area Developer is an entity, they must promptly notify Hck Hot Chicken in writing of any transfer, assignment, encumbrance, gift, or conveyance of equity or voting rights by any owner, even if it doesn't technically constitute an "Assignment" under the agreement. The Area Developer is also prohibited from pledging or granting any security interest in the Development Agreement to a third party without Hck Hot Chicken's prior written consent. The definition of assignment also includes events like a merger or transfer of control of the Area Developer.