If a Hck Hot Chicken franchisee is in default, can they assign the franchise?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.3 Option to Terminate Without Opportunity to Cure.
Franchisee shall be deemed to be in default and Franchisor may, at its option, terminate this Agreement and all rights granted hereunder, without affording Franchisee any opportunity to cure the default, effective immediately upon receipt of notice by Franchisor upon the occurrence of any of the following events:
- 14.3.1 Abandonment.
If Franchisee shall abandon the Franchised Restaurant.
For purposes of this Agreement, "abandon" shall refer to (i) Franchisee's failure, at any time during the term of this Agreement, to keep the Premises or Franchised Restaurant open and operating for business for a period of three consecutive days, except as provided in the HCK Hot Chicken Brand Standards Manual, (ii) Franchisee's failure to keep the Premises or Franchised Restaurant open and operating for any period after which it is not unreasonable under the facts and circumstances for Franchisor to conclude that Franchisee does not intend to continue to operate the Franchised Restaurant, unless such failure to operate is due to Force Majeure (subject to Franchisee's continuing compliance with this Agreement), (iii) failure to actively and continuously maintain and answer the telephone listed by Franchisee for the Franchised Restaurant solely with the "HCK Hot Chicken" name (as the same may be modified in accordance with this Agreement); (iv) the withdrawal of permission from the applicable lessor that results in Franchisee's inability to continue operation of the Franchised Restaurant; or (v) closing of the Franchised Restaurant required by Applicable Law if such closing was not the result of a violation of this Agreement by Franchisor.
- 14.3.2 Assignment, Death, or Incapacity.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Hck Hot Chicken Franchise Disclosure Document, a franchisee's ability to assign the franchise agreement if they are in default is not explicitly addressed. However, the document does state that if a franchisee is in default, Hck Hot Chicken has the option to terminate the agreement without providing an opportunity to cure the default in certain situations, including those involving assignment.
Specifically, the FDD indicates that default can occur immediately upon assignment, death, or incapacity of the franchisee. This suggests that any attempt to assign the franchise while in default could trigger immediate termination by Hck Hot Chicken. The franchisor also has the right to cure defaults on behalf of the franchisee, but this does not imply the franchisee can assign the agreement while in default.
Because the FDD does not directly state whether a franchisee can assign the franchise while in default, prospective franchisees should seek clarification from Hck Hot Chicken regarding their policy on assignment under default conditions. Understanding the franchisor's stance on this issue is crucial for assessing the risks and potential exit strategies associated with the franchise agreement.