What is the summary of the Hck Hot Chicken Franchise Agreement provisions related to transfer?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
19.7 | The laws of the state of Florida, subject to applicable state law. |
| Provision | Section in Franchise Agreement | Summary | |-----------------------------------------------------------------------------------|--------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | governmental agency indicating that you are no longer licensed to use our Marks. See also "r" below. | | j. Assignment of | Section 13.1 | No restriction on our right to assign. | | contract by Franchisor | | | | k. "Transfer" by franchisee – defined | Section 13.2.1 | Includes any voluntary, involuntary, direct, or indirect assignment, sale, gift, exchange, grant of a security interest, or change of ownership in the Franchise Agreement, the Franchise, or interest in the Franchise. | | l. Franchisor approval of | Section 13.2 | Transfers require our express written consent. | | transfer by franchisee m. Conditions for franchisor approval of transfer | Sections 13.2 - 13.4 | New franchisee: must qualify; assume the Franchise Agreement or sign a new franchise agreement; complete training and pay our training fee; and refurbish the Restaurant. You must provide us with an estoppel agreement and a list of all persons having an interest in the Franchise Agreement or in the franchisee; pay all amounts then due to us; sign a general release; sign a non-compete agreement not to engage in a competitive business for one year within: (i) a 25-mile radius of your HCK Hot Chicken Restaurant (and including the premises of the Restaurant); and (ii) a 25-mile radius of all other HCK Hot Chicken Restaurants that are operating or under construction; provide us with all documents relating to the transfer; disclose to us all material information that we request regarding the transferee; the purchase price and the terms of the transfer; must not be in default of the Franchise Agreement; and pay a transfer fee and reimburse our broker fees (See also "r" below). If the Franchise Agreement was signed pursuant to an Area Development Agreement and you operate three or fewer Restaurants, all Franchise Agreements operated under the Area Development Agreement must be assigned to the same assignee. If the Franchise Agreement was signed pursuant to an Area Development Agreement and you operate four or more Restaurants, at least half of the Restaurants operated under the Area Development Agreement must be assigned to the same assignee. With our written consent, you may transfer a Franchise Agreement to an entity of which you directly own 100% interest for convenience of ownership. If the new franchisee is a business entity, all holders of a 10% or greater interest in the new franchisee must sign a Continuing Guaranty. You must reimburse us for all costs and expenses that we incur in connection with such a transfer, including attorneys' fees. Before shares of a Franchisee which is a business entity may be offered by private offering, you must provide us with copies of all offering materials; indemnify us, our officers, directors, shareholders, partners, agents, representatives, independent contractors, and employees of each in connection with the offering; and pay us a non- refundable fee of 50% of our then current Initial Franchise Fee or a greater amount, if necessary, to reimburse us for our costs and expenses associated with reviewing the proposed offering. |
| Provision | Development Agreement | Summary from the sale of fried chicken, or (iii) any business engaged in the | |
|---|---|---|---|
| preparation, production or sale, at wholesale, of any fried chicken food product. Notwithstanding the foregoing, Competitive Activities shall not include the direct or indirect ownership solely as an investment, of securities of any entity which are traded on any national securities exchange if the owner thereof (i) is not a controlling person of, or a member of a group which controls, such entity and (ii) does not, directly or indirectly, own 5% or more of any class of securities of such entity. | |||
| r. Non-competition covenants after the franchise is terminated or expires | Section 8.2 | Except with our express written consent, no involvement in any Competitive Activities, as defined above, for 2years within the Development Area. | |
| s. Modification of the | Section 8.3 | The Area Development Agreement may be modified only by | |
| agreement | written agreement between the parties. | ||
| t. Integration/merger clause | Section 11.9 | Only the terms of the Area Development Agreement are binding (subject to applicable state law). Any representations or promises outside of this Franchise Disclosure Document and Area Development Agreement may not be enforceable. | |
| u. Dispute resolution by arbitration or mediation | Section 10 | Before either of us may file for arbitration, you and we agree to attempt to resolve any dispute pursuant to mediation held in the principal city closest to our principal place of business (currently Sarasota, FL) and the mediation will be governed in accordance with Rules of Practice and Procedure of Judicial Arbitration & Mediation Services, Inc., unless otherwise agreed, subject to applicable state law. | |
| v. Choice of forum | Sections 10.1,10.2 and 11.15 | Before either of us may file arbitration, you and we agree to attempt to resolve any dispute pursuant to mediation held in the principal city closest to our principal place of business (currently Sarasota, FL) and the mediation will be governed in accordance with Rules of Practice and Procedure of Judicial Arbitration & Mediation Services, Inc., unless otherwise agreed. Subject to applicable state law, litigation must be in the principal city closest to our principal place of business (currently Sarasota, FL). | |
| w. Choice of law | Section 11.8 | The laws of the state of Florida, subject to applicable state law. |
| Provision | Section in Franchise Agreement | Summary | |--------------------|--------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | v. Choice of forum | Sections 18.2 and 19.14 | Except for certain claims and subject to state law, you and we agree that the principal city closest to our principal place of business (currently Sarasota, FL) will be the venue for any arbitration under the Franchise Agreement, and you and we both waive the right to a trial by jury. Subject to applicable state law, arbitration and litigation must be in the principal city closest to our principal place of business (currently Sarasota, FL). | | w. Choice of law | Section 19.7 | The laws of the state of Florida, subject to applicable state law. | [Remainder of page intentionally left blank. Item 17 continues next page.]
This table lists certain important provisions of the Area Development Agreement. You should read these provisions in the agreement attached to this Disclosure Document.
B. AREA DEVELOPMENT AGREEMENT
| | B.
Source: Item 17 — RENEWAL, TERMINATIONS, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to the 2025 FDD, Hck Hot Chicken outlines specific procedures and conditions for transferring a franchise. Hck Hot Chicken retains the right to assign the franchise agreement without any restrictions. However, a franchisee's ability to transfer is subject to Hck Hot Chicken's express written consent. A transfer is defined broadly, encompassing any voluntary, involuntary, direct, or indirect assignment, sale, gift, exchange, grant of a security interest, or change of ownership in the Franchise Agreement, the Franchise, or interest in the Franchise.
To gain approval for a transfer, the new franchisee must meet several conditions. They must qualify as a franchisee, assume the existing Franchise Agreement or sign a new one, complete the required training and pay the associated training fee, and refurbish the restaurant to Hck Hot Chicken's standards. The transferring franchisee must provide an estoppel agreement, a list of all parties with an interest in the Franchise Agreement or the franchisee, pay all outstanding amounts owed to Hck Hot Chicken, sign a general release and a non-compete agreement. This non-compete restricts involvement in a competitive business for one year within a 25-mile radius of the Hck Hot Chicken Restaurant being transferred and all other Hck Hot Chicken Restaurants that are operating or under construction. The transferring franchisee must also provide all relevant transfer documents, disclose all requested material information about the transferee, detail the purchase price and terms of the transfer, not be in default of the Franchise Agreement, and pay a transfer fee and reimburse Hck Hot Chicken's broker fees.
Additional stipulations apply if the Franchise Agreement was signed under an Area Development Agreement. If the franchisee operates three or fewer restaurants, all Franchise Agreements under the Area Development Agreement must be assigned to the same party. For those operating four or more restaurants, at least half must be assigned to the same assignee. Hck Hot Chicken may consent to a transfer to an entity wholly owned by the franchisee for ownership convenience. If the new franchisee is a business entity, all individuals holding a 10% or greater interest must sign a Continuing Guaranty. The franchisee is responsible for reimbursing Hck Hot Chicken for all transfer-related costs, including attorney's fees. Before offering shares of a franchisee business entity through a private offering, Hck Hot Chicken requires copies of all offering materials, indemnification, and a non-refundable fee of 50% of the then-current Initial Franchise Fee (or a greater amount to cover Hck Hot Chicken's costs in reviewing the offering).
For transfers related to the Area Development Agreement, Hck Hot Chicken's approval is required, and it may be withheld for any reason. Unless otherwise agreed, the Area Development Agreement and all Franchise Agreements signed under it must be simultaneously assigned to the same assignee. Hck Hot Chicken also retains a right of first refusal, giving them 30 days to match any offer for the Hck Hot Chicken Restaurant. In the event of the franchisee's death or disability, their heirs have nine months to assign the Area Development Agreement to a person acceptable to Hck Hot Chicken.