Under what conditions can a Hck Hot Chicken franchisee transfer a Franchise Agreement to an entity they own?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Area Development Agreement | Summary |
|---|---|---|
| may continue to own and operate all Restaurants pursuant to then | ||
| j. Assignment of contract | Section 7.1 | existing Franchise Agreements. No restriction on our right to assign. |
| by Us | ||
| k. "Transfer" by you - | Section 7.3 | Includes transfer of the agreement or change in ownership of a |
| definition | franchisee which is an entity. | |
| l. Our approval of transfer | Section 7.3 | Transfers require our express written consent, which consent may |
| by you | be withheld for any reason whatsoever in our sole judgment. | |
| m. Conditions for our approval of transfer | Sections 7.2 and 7.3 | Except as described below, you may not transfer your Area Development Agreement or any Franchise Agreement signed pursuant to the Area Development Agreement except with our written consent and a simultaneous assignment of the Area Development Agreement and all Franchise Agreements signed pursuant to the Area Development Agreement 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. At our election, the assignee must sign our then-current form of Franchise Agreement for each Restaurant then developed or under development. 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. |
| n. Our right of first refusal to acquire your business | Section 7.3 | We have 30 days to match any offer for your HCK Hot Chicken Restaurant. |
| o. Our option to purchase | N/A | Not applicable. |
| your business | ||
| p. Your death or disability | Section 9.1.2 | Your heirs have nine months after your death or legal incapacity to assign the Area Development Agreement to a person acceptable to us. See also "m" above. |
| q. |
Source: Item 17 — RENEWAL, TERMINATIONS, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, a franchisee can transfer their Franchise Agreement to an entity they directly own under specific conditions. The FDD states that Hck Hot Chicken's written consent is required for such a transfer, and it must be for the convenience of ownership. This means the franchisee cannot transfer the agreement without explicit approval from Hck Hot Chicken.
Furthermore, if the new franchisee is a business entity, all individuals holding a 10% or greater interest in that entity must sign a Continuing Guaranty. This ensures that individuals with significant stakes in the new entity are also personally responsible for upholding the Franchise Agreement. The franchisee is also responsible for reimbursing Hck Hot Chicken for all costs and expenses incurred during the transfer, including attorney's fees. This financial responsibility can add a significant cost to the transfer process.
In summary, while Hck Hot Chicken allows for transfers to franchisee-owned entities, it retains control over the process through its consent requirement and imposes conditions to protect its interests. A prospective franchisee should carefully consider these conditions and the associated costs before deciding to transfer their Franchise Agreement.