Are there any restrictions on assignment within the Hck Hot Chicken franchise agreement?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisor elects to exercise the ROFR, Franchisor or its nominee, as applicable, shall send written notice of such election to Franchisee within 60 days of receipt of Franchisee's request (the "ROFR Period").
If Franchisor accepts such offer, the training and transfer/administrative fees due by Franchisee in accordance with this Agreement shall be waived by Franchisor, and the closing of the transaction shall occur within 60 days following the date of Franchisor's acceptance.
Any material change in the terms of an offer prior to closing (or the failure to close the transaction within 60 days following the written notice provided by Franchisee) shall cause it to be deemed a new offer, subject to the same right of first refusal by Franchisor, or its third party designee, as in the case of the initial offer.
Franchisor's failure to exercise such ROFR shall not constitute consent to the transfer or a waiver of any other provision of this Agreement, including any of the requirements of this Section with respect to the proposed transfer.
The ROFR is fully assignable by Franchisor.
Without waiving any other rights provided for herein or otherwise, Franchisor hereby waives its ROFR if the proposed transferee/assignee is an immediate family member of Franchisee;
(d) The Franchisee shall not be in default under the terms of this Agreement (or any other related agreement), the HCK Hot Chicken Brand Standards Manual or any other obligations owed Franchisor, and all of its then-due monetary obligations to Franchisor shall have been paid in full;
(e) The Franchisee, and its Owners, if the Franchisee is an Entity, shall execute a general release under seal, in a form prescribed by Franchisor, of any and all claims against Franchisor, its Affiliates, Owner(s), directors, officers, agents and employees;
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Hck Hot Chicken Franchise Disclosure Document, the franchise agreement includes certain restrictions regarding the transfer or assignment of the franchise. Specifically, Hck Hot Chicken retains a right of first refusal (ROFR) if a franchisee wishes to sell their franchise. This means that before a franchisee can sell to a third party, Hck Hot Chicken has the option to purchase the franchise on the same terms offered by the third party.
If Hck Hot Chicken decides to exercise its ROFR, it must provide written notice within 60 days of receiving the franchisee's request to sell. Upon acceptance, the closing of the transaction must occur within 60 days. The training and transfer/administrative fees are waived by Hck Hot Chicken if they exercise their right of first refusal. Any changes to the terms of the offer before closing are considered a new offer, which would again be subject to Hck Hot Chicken's right of first refusal. However, Hck Hot Chicken waives its right of first refusal if the transfer is to an immediate family member of the franchisee.
Even if Hck Hot Chicken chooses not to exercise its right of first refusal, the transfer is still conditional. The franchisee must not be in default of the franchise agreement or any other related agreements, and all monetary obligations to Hck Hot Chicken must be paid in full. Additionally, the franchisee and its owners must execute a general release of claims against Hck Hot Chicken. Failure to comply with these conditions means the transfer can be blocked by Hck Hot Chicken, even if they initially waived their right of first refusal. These stipulations are fairly standard in franchising to ensure brand consistency and protect the franchisor's interests.