Does the Hck Hot Chicken franchisee remain liable under the terms of the lease after an assignment?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Former Franchisee hereby consents to assign all of its rights and delegate its duties with regard to the Former Franchise Agreement and all exhibits and attachments thereto from Former Franchisee to New Franchisee, subject to the terms and conditions of this Agreement, and conditioned upon New Franchisee's signing the New Franchise Agreement pursuant to Section 5 of this Agreement.
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- Consent to Requested Assignment of Franchised Business. Franchisor hereby consents to the Requested Assignment of the Franchised Business from Former Franchisee to New Franchisee upon receipt of the Franchisor's Assignment Fee from Former Franchisee and the mutual execution of this Agreement by all parties. Franchisor waives its right of first refusal set forth in the Former Franchise Agreement and waives any obligation for Former Franchisee to enterinto a subordination agreement pursuant to the Former Franchise Agreement.
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- Termination of Rights to the Franchised Business. The parties acknowledge and agree that effective upon the date of this Agreement, the Former Franchise Agreement shall terminate and all of Former Franchisee'srightsto operate the Franchised Business are terminated and that from the date of this Agreement only New Franchisee shall have the sole right to operate the Franchised Business under the New Franchise Agreement. Former Franchisee and the undersigned Owners agree to comply with all of the covenants in the Former Franchise Agreement that expressly or by implication survive the termination, expiration, or
Source: Item 22 — CONTRACTS (FDD pages 54–55)
What This Means (2025 FDD)
Based on the 2025 Hck Hot Chicken Franchise Disclosure Document, Exhibit I-6 outlines the Approval of Requested Assignment agreement. This agreement details the process and conditions under which a former franchisee can assign their rights and responsibilities to a new franchisee.
Specifically, the agreement states that the former franchisee assigns all rights and delegates all duties related to the Former Franchise Agreement to the new franchisee, contingent upon the new franchisee signing a New Franchise Agreement. Upon the agreement date, the Former Franchise Agreement terminates, and the former franchisee's rights to operate the Franchised Business end, with the new franchisee gaining the sole right to operate under the New Franchise Agreement.
However, the former franchisee and owners must still comply with covenants in the Former Franchise Agreement that survive termination, expiration, or transfer. The former franchisee may also need to execute a General Release Agreement, unless state law prevents it. This indicates that while the operation rights transfer, certain obligations might persist for the former franchisee even after the assignment is approved and executed.
Prospective Hck Hot Chicken franchisees should carefully review Exhibit I-6 and consult with legal counsel to fully understand their potential liabilities after assigning their franchise, particularly regarding any surviving covenants or the need for a general release agreement.