After the termination of an Angry Chickz franchise agreement, what geographic areas are Restricted Persons prohibited from engaging in Competitive Activities?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.1.2 To the extent permitted by Applicable Law, upon (i) the expiration or termination (including nonrenewal) of this Agreement, (ii) the occurrence of any Assignment, or (iii) the cession of any Restricted Person's relationship with Franchisee, each person who was a Restricted Person before such event shall not for a period of 24 months thereafter, either directly or indirectly, through one or more affiliated Entities engage in Competitive Activities within the Protected Area or within a radius of 10 miles from any then-existing Restaurant. In the event of the violation of this provision by Developer following termination or expiration of this Agreement, the period of time Developer shall be required to abide by this obligation shall be extended to a period ending 24 months after Developer is no longer in default of this obligation.
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, following the expiration or termination of the franchise agreement, a Restricted Person is restricted from engaging in Competitive Activities for 24 months. This restriction applies within the franchisee's Protected Area or within a 10-mile radius of any then-existing Angry Chickz Restaurant. If the Developer violates this provision after termination or expiration, the restriction period extends to 24 months after the Developer is no longer in default of this obligation.
This non-compete clause prevents former franchisees from leveraging the knowledge and experience gained while operating an Angry Chickz franchise to directly compete with the brand. The Protected Area typically defines the geographic region where Angry Chickz grants the franchisee certain protections against direct competition from other company-owned or franchised locations. The additional 10-mile radius around existing restaurants further broadens this protection, ensuring that former franchisees cannot open a competing business near any Angry Chickz location, regardless of whether it was part of their original Protected Area.
The extension of the non-compete period if the Developer remains in default highlights the importance of adhering to the terms of the franchise agreement even after termination. Failure to comply with post-termination obligations can prolong the period during which the former franchisee is restricted from engaging in competitive activities. This clause is designed to protect Angry Chickz's market share and brand reputation by preventing former franchisees from unfairly competing using confidential information and established brand recognition.
Prospective Angry Chickz franchisees should carefully consider the implications of this non-compete clause, especially if they have plans to remain in the restaurant industry after the franchise agreement ends. Understanding the specific boundaries of the Protected Area and the potential impact of the 10-mile radius restriction is crucial for making informed decisions about their future business ventures. Franchisees should seek legal counsel to fully understand the scope and enforceability of these restrictions in their specific jurisdiction.