Does the non-compete agreement for Angry Chickz apply to activities outside the Development Area during the term?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
t use the Marks or any other trademarks, trade names, service marks, logotypes, insignias, trade dress or designs in any manner or for any purpose, including in connection with any offering of securities or any request for credit, without the prior express written approval of Company.
1.3 Territorial Rights
- 1.3.1 During the Term of this Agreement, neither Company nor its Affiliates shall operate or grant a license or franchise to any other person or Entity to operate a Dine-In Restaurant within the Development Area, provided, that Developer is in compliance with the terms of this Agreement.
- 1.3.2 Company expressly reserves all other rights, including the exclusive, unrestricted right, in its discretion, directly and indirectly, itself and through its employees, Affiliates, representatives, licensees, franchisees, assigns, agents and others:
- (a) to develop, own and/or operate and to franchise or license others to own and/or operate (i) Restaurants, the physical location of which are located outside of the Development Area, regardless of proximity to the Development Area, (ii) businesses that provide goods and services within and outside of the Development Area, regardless of proximity to the Development Area under names other than "Angry Chickz," (iii) Restaurants and other businesses at Non-Traditional Venues within or outside the Development Area, and regardless of their proximity to any Restaurant developed or under development or consideration by Developer; and (iv) businesses operating under names other than under the Marks at any location, and of any type whatsoever, regardless of their proximity to the Development Area and whether or not such businesses use any portion of the System, offer similar products or services or compete with Restaurants.
Source: Item 23 — RECEIPTS (FDD pages 54–260)
What This Means (2025 FDD)
Based on the 2025 Angry Chickz Franchise Disclosure Document, the franchisor retains significant rights outside the franchisee's development area. Specifically, Angry Chickz reserves the right to operate or franchise others to operate restaurants outside the development area, regardless of proximity. This includes businesses offering similar goods and services under different names, as well as restaurants and other businesses at non-traditional venues, again without restrictions based on proximity to the franchisee's locations.
Angry Chickz also maintains the right to offer, sell, and market products and services identified by their trademarks through various channels outside the franchisee's development area. These channels include catering, the internet, mobile applications, online ordering, third-party delivery services, food trucks, mail order, and direct mail. The only restriction mentioned is that Angry Chickz cannot operate restaurants within the franchisee's development area, except for those at non-traditional venues.
For a prospective Angry Chickz franchisee, this means that while you have territorial protection within your defined development area for traditional dine-in restaurants operating under the Angry Chickz name, the franchisor can engage in activities that might compete with your business outside of that area. This includes opening other types of businesses or allowing other franchisees to operate nearby under different brand names or through alternative distribution methods. It is important to understand the scope of the development area and the potential for competition from the franchisor's other ventures.
This type of arrangement, where the franchisor retains rights to operate or franchise outside a franchisee's territory, is relatively common in the franchise industry. It allows the franchisor to pursue various business opportunities and adapt to changing market conditions. However, it also means that franchisees need to be aware of the potential for competition from the franchisor's other activities and factor that into their business planning.