Does Hck Hot Chicken require notice to the franchisee before automatic termination?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
er fails to complete all phases of the Initial Training Program or the Extra Practice Week to Franchisor's satisfaction prior to the opening of the Franchised Restaurant.
- 14.4 Termination with Notice and Opportunity to Cure. Except for any default by Franchisee under Sections 14.2 or 14.3 of this Agreement, and as otherwise expressly provided elsewhere in this Agreement, Franchisee shall have 30 days (10 days in the case of any default in the timely payment of sums due to Franchisor or its Affiliates) after Franchisor's written notice of default within which to remedy any default under this Agreement, and to provide evidence of such remedy to Franchisor. If any such default is not cured within that time period, or such longer time period as Applicable Law may require or as Franchisor may specify in the notice of default, this Agreement and all rights granted by it shall thereupon automatically terminate without further notice or opportunity to cure.
- 14.5 Reimbursement of Franchisor Costs. In the event of a default by Franchisee, all of Franchisor's costs and expenses arising from such default, including reasonable legal fees and reasonable hourly charges of Franchisor's administrative employees shall be paid to Franchisor by Franchisee within five days after cure or upon demand by Franchisor if such default is not cured.
- 14.6 Assumption of Management; Step-In Rights. In order to prevent any interruption of operations which would cause harm to the Franchised Restaurant, thereby depreciating the value thereof, Franchisor has the right, but not the obligation, to step-in and designate an individual or individuals of its choosing ("Interim Manager") for so long as Franchisor deems necessary and practical to temporarily manage the Franchised Restaurant: (i) if Franchisee fails to comply with any System standard or provision of this Franchise Agreement and does not cure the failure within the time period specified by the Franchise Agreement or by Franchisor; (ii) if Franchisor determines in its sole judgment that the operation of the Franchised Restaurant is in jeopardy; (iii) if Franchisor determines in its sole discretion that operational problems require that Franchisor operate the Franchised Restaurant; (iv) if Franchisee abandons or fails to actively operate the Franchised Restaurant; (v) upon Franchisee's (or Franchisee's Operating Principal, if an entity) absence, termination, illness, death, incapacity or disability; or (vi) if Franchisor deems Franchisee (or Franchisee's Operating Principal, if any entity) incapable of operating the Franchised Restaurant ("Step-in Rights"). If Franchisor exercises the Step-In Rights:
- (a) Franchisee agrees to pay Franchisor, in addition to all other amounts due under this Franchise Agreement, the Interim Manager's compensation and any direct out-of-pocket costs and expenses in connection with the exercise of such Step-In Rights;
- (b) all monies from the operation of the Franchised Restaurant during such period of operation by Franchisor shall be kept in a separate account, and the expenses of the Franchised Restaurant, including Franchisor's costs and expenses and the compensation and direct out-of-pocket costs and expenses for the Interim Manager, shall be charged to said account;
- (c) Franchisee acknowledges that the Interim Manager will have a duty to utilize only reasonable efforts and will not be liable to Franchisee or its owners for any debts, losses, or obligations the Franchised Restaurant
incurs, or to any of Franchisee's creditors for any supplies, products, or other assets or services the Franchised Restaurant purchases, while Interim Manager manages it;
- (d) The Interim Manager will have no liability to Franchisee except to the extent directly caused by its gross negligence or willful misconduct.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, the franchise agreement may be subject to automatic termination without further notice or opportunity to cure under certain conditions. Specifically, if a franchisee defaults on the agreement, Hck Hot Chicken is typically required to provide a written notice of default, allowing the franchisee 30 days to remedy the situation, or 10 days in the case of payment defaults. However, if the franchisee fails to cure the default within the specified time, the agreement can automatically terminate.
There are exceptions where Hck Hot Chicken can terminate the agreement without providing an opportunity to cure. These exceptions include situations such as abandonment of the restaurant, certain issues related to assignment, death, or incapacity of the franchisee, misrepresentation relating to the acquisition of the agreement, health or safety violations that pose an imminent danger to public health, and failure to complete required training programs.
It is important for a prospective Hck Hot Chicken franchisee to understand the specific conditions under which the franchise agreement can be automatically terminated, as this could have significant implications for their investment and business operations. Franchisees should carefully review the termination clauses in the franchise agreement and seek legal counsel to fully understand their rights and obligations.