What is the limitation on transfer fees that Hck Hot Chicken can collect from franchisees?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
NOW, THEREFORE, in consideration of the mutual covenants, promises, and agreements herein contained, the parties hereto hereby covenant, promise, and agree as follows:
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- Payment of Fees. In consideration for the Requested Assignment, Former Franchisee acknowledges and agrees to pay Franchisor the Transfer Fee, as required under the Franchise Agreement ("Franchisor's Assignment Fee").
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- Assignment and Assumption. 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, the former franchisee is responsible for paying the transfer fee to Hck Hot Chicken when requesting an assignment of the franchise agreement. Hck Hot Chicken's consent to the assignment is contingent upon receiving this transfer fee and the mutual execution of the agreement by all parties involved. Hck Hot Chicken retains the right to approve or deny the transfer.
The agreement specifies that upon the transfer's effective date, the former franchisee's rights to operate the Hck Hot Chicken business are terminated, and only the new franchisee has the right to operate under a new franchise agreement. The former franchisee must also comply with any obligations that survive the termination or transfer of the original agreement and execute Hck Hot Chicken's current form of General Release Agreement, unless state law prevents it.
While the document states that a transfer fee is required, it does not specify the amount or how it is calculated. A prospective franchisee should inquire about the specific amount of the transfer fee and the conditions under which it may be adjusted or waived. Understanding the transfer fee is crucial for financial planning and assessing the overall cost of the franchise.