factual

What are some examples of 'reasonable restrictions and conditions' that Hck Hot Chicken may impose on the disclosure of financial information related to the sale of a franchise?

Hck_Hot_Chicken Franchise · 2025 FDD

Answer from 2025 FDD Document

or in connection with the conduct of such test marketing and shall comply with the Franchisor's rules and regulations established from time to time in connection herewith.

  • 9.5 Customer Reporting and Comments.
  • 9.5.1 At Franchisor's request, and subject to applicable law, Franchisee shall use reasonable efforts to secure the names, addresses and other information reasonably required by Franchisor, of Franchisee's customers at the Restaurant and shall allow such information to be used by Franchisor only for the "HCK Hot Chicken" brand. Franchisee may not divulge such customer names, addresses or other information, with or without remuneration, to any third party. Franchisee shall respond promptly to each customer inquiry or complaint and resolve all reasonable complaints to the customer's satisfaction.
  • 9.5.2 At Franchisor's request, Franchisee shall purchase, use and display in the Restaurant during all operating hours, any required, as specified in the Brand Standards Manual, physical or electronic devices or systems to gather customer information and comments regarding their experience at the Restaurant, or HCK Hot Chicken Restaurants in general.

SECTION 10. REPORTS, BOOKS AND RECORDS, INSPECTIONS

10.1 General Reporting. Franchisee shall, as and when specified by Franchisor, submit to Franchisor statistical control forms and such other financial, operational and statistical information (by paper, facsimile, email, or other method of transmission) as Franchisor may require to: (i) assist Franchisee in the operation of the Franchised Restaurant in accordance with the System; (ii) allow Franchisor to monitor the Franchisee's Gross Sales, purchases, costs and expenses; (iii) enable Franchisor to develop chain wide statistics which may improve bulk purchasing; (iv) assist Franchisor in the development of new authorized products or the removal of existing unsuccessful Authorized Products; (v) enable Franchisor to refine existing Authorized Products; (vi) generally improve chain wide understanding of the System (collectively, the "Information"). Without limiting the generality of the foregoing:

  • 10.1.1 Franchisee will electronically link the Franchised Restaurant to Franchisor and itsthird-party supplier and will allow Franchisor to poll on a daily or more frequent basis.
  • 10.1.2 For restaurants not on the "HCK Hot Chicken" Information System, at Franchisor's request, on or before Wednesday of each Week during the Term hereof, Franchisee shall submit a Gross Sales report signed by Franchisee, on a form prescribed by Franchisor, reporting all Gross Sales for the preceding Week, together with such additional financial information as Franchisor may from time-to-time request. If the Franchisee fails to submit any required report when due, Franchisee must pay a fee of $100 per occurrence and $100 per Week until the Franchisee submits the required report, which shall be deposited into the Brand Fund or such other fund as Franchisor may designate.
  • 10.1.3 Within 90 days following the end of each calendar year, Franchisee shall submit to Franchisor an unaudited financial statement prepared in accordance with generally accepted accounting principles, and in such form and manner prescribed by Franchisor, which shall be certified by Franchisee to be accurate and complete. Promptly upon Franchisor's request, Franchisee will furnish Franchisor with a copy of each of Franchisee's reports and returns of sales, use, and gross receipt taxes related to the operation of the Franchised Restaurant. Franchisor reserves the right to require such further information concerning the Franchised Restaurants that Franchisor may from time-to-time reasonably request.
  • 10.2 Inspections. Franchisor's authorized representatives shall have the right, from time to time, to enter upon the entire premises of the Franchised Restaurant during business hours, to examine same, conferring with Franchisee's employees, inspecting and checking operations, food, beverages, furnishings, interior and exterior decor, supplies, fixtures, and equipment, and determining whether the business is being conducted in accordance with this Agreement, the System and the HCK Hot Chicken Brand Standards Manual. Franchisor shall use reasonable efforts to avoid materially disrupting the operation of the Franchised Restaurant. Franchisee shall pay Franchisor its then-current fee for any such inspection, which shall be due to Franchisor directly upon invoicing. This fee is not refundable under any circumstances.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)

What This Means (2025 FDD)

According to the 2025 Hck Hot Chicken Franchise Disclosure Document, franchisees face several requirements regarding the disclosure and handling of financial information. Hck Hot Chicken requires franchisees to electronically link their restaurants to the franchisor and its third-party suppliers, allowing the franchisor to poll data frequently. For restaurants not on the Hck Hot Chicken Information System, franchisees must submit a weekly gross sales report and any additional financial information requested by Hck Hot Chicken. Failure to submit these reports results in a fee of $100 per occurrence and $100 per week until the report is submitted. Franchisees must also submit an annual unaudited financial statement within 90 days of each calendar year's end.

Additionally, Hck Hot Chicken mandates that franchisees use reasonable efforts to secure customer information, such as names and addresses, for the brand's use only, and prohibits franchisees from sharing this information with any third party. Franchisees must also use any required physical or electronic devices to gather customer feedback. Franchisees are required to submit statistical control forms and other financial, operational, and statistical data as requested by Hck Hot Chicken to assist in the operation of the franchise, monitor gross sales, and improve bulk purchasing.

Furthermore, franchisees must operate the restaurant and implement procedures to prevent unauthorized use and disclosure of trade secrets, including restrictions on disclosure to employees and the use of non-disclosure agreements. Franchisees are also restricted from disclosing the substance of the franchise agreement to third parties, except when necessary to inform lessors or obtain permits, and must obtain written approval from Hck Hot Chicken before making any public communications or press releases about the agreement or the restaurant's operation. These measures ensure that sensitive financial and operational data remains confidential and is used appropriately to benefit the Hck Hot Chicken system.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.