During the term of the agreement, can a Restricted Person engage in Competitive Activities for Angry Chickz?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.2.1 During the Term, no Restricted Person shall in any capacity, either directly or indirectly, through one or more Affiliates or otherwise, engage in any Competitive Activities at any location, whether within or outside the Development Area.
"Competitive Activities" means to, own, operate, lend to, advise, be employed by, or have any financial interest in (i) any restaurant 25% or more of whose gross sales is derived from the sale of boneless breaded chicken, other than a Restaurant operated pursuant to a validly subsisting Franchise Agreement with Company, or (ii) any business that specializes in developing, owning, operating or franchising restaurants 25% or more of whose gross sales is derived from the sale of boneless breaded chicken, or (iii) any business engaged in the preparation, production or sale, at wholesale, of any boneless breaded chicken food products. 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 applicable 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.
Source: Item 23 — RECEIPTS (FDD pages 54–260)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, during the term of the agreement, a Restricted Person is prohibited from engaging in Competitive Activities. The FDD defines "Competitive Activities" as owning, operating, advising, being employed by, or having a financial interest in any restaurant deriving 25% or more of its gross sales from boneless breaded chicken, or any business specializing in developing, owning, operating, or franchising such restaurants, or any business engaged in the wholesale preparation, production, or sale of boneless breaded chicken food products. However, holding less than 5% of securities in a publicly traded entity is not considered a Competitive Activity.
This restriction applies to Restricted Persons, which likely includes the franchisee, their owners, and potentially their close family members or business partners. The restriction is broad, covering various forms of involvement in competing businesses, whether direct or indirect, and applies regardless of the location, whether within or outside the Development Area.
This non-compete clause is a standard practice in franchising to protect the brand and market share of Angry Chickz. Prospective franchisees should carefully consider the scope of these restrictions and how they might impact their future business opportunities. It is important to understand who is considered a "Restricted Person" under the agreement and the full extent of the activities that are prohibited during the term of the franchise agreement.