What constitutes a 'Competitive Business' in relation to a Bb.Q Chicken franchise?
Bb_Q_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
12.1.2 Own, maintain, advise, help, invest in, make loans to, be employed by, engage in or have any interest in any restaurant or food service business other than the Franchised Business (including any business operated by you prior to entry into this Agreement), which business is of a character and concept similar to the Franchised Business, including a restaurant which offers and sells the same or similar food products (a "Competitive Business").
12.2 You covenant that, except as otherwise approved in writing by us, you shall not, for a continuous and uninterrupted period commencing upon the expiration or termination of this Agreement, or upon transfer, and continuing for two (2) years thereafter (and, in case of any violation of this covenant, for two (2) years after the violation ceases), either directly or indirectly, for yourself, or through, on behalf of or in conjunction with any person, persons, partnership or corporation, own, maintain, advise, help, invest in, make loans to, be employed by, engage in or have any interest in any Competitive Business which is located within twenty (20) miles of any bb.q Chicken Franchised Business in the System.
12.3 Subsections 12.1.3 and 12.2 of this Section shall not apply to ownership by you of less than a five percent (5%) beneficial interest in the outstanding equity securities of any corporation which is registered under the Securities Exchange Act of 1934, as amended.
Source: Item 23 — RECEIPTS (FDD pages 62–283)
What This Means (2025 FDD)
According to Bb.Q Chicken's 2025 Franchise Disclosure Document, a 'Competitive Business' is defined as any restaurant or food service business, other than the franchised Bb.Q Chicken business, that has a similar character and concept. This includes businesses that offer and sell the same or similar food products. This definition applies during the term of the Franchise Agreement. Franchisees are prohibited from owning, maintaining, advising, helping, investing in, making loans to, being employed by, engaging in, or having any interest in such a Competitive Business, unless they receive written approval from Bb.Q Chicken.
This restriction is significant for prospective franchisees as it limits their ability to be involved in other food service businesses that could be seen as competing with Bb.Q Chicken. Even businesses operated by the franchisee prior to entering the agreement could be considered a Competitive Business. This non-compete clause ensures that the franchisee's focus remains solely on the success of their Bb.Q Chicken franchise and prevents them from diverting resources or knowledge to competing ventures.
Furthermore, even after the termination or transfer of the franchise agreement, a similar restriction applies for a period of two years. During this time, the franchisee cannot engage in a Competitive Business within 20 miles of any Bb.Q Chicken franchise in the system. The FDD specifies an exception to these restrictions, allowing a franchisee to hold less than a 5% beneficial interest in the equity securities of a corporation registered under the Securities Exchange Act of 1934. This exception provides some flexibility for franchisees to make minor investments in publicly traded companies that may operate similar businesses without violating the non-compete agreement.
Bb.Q Chicken requires franchisees to obtain written approval before engaging in any business activity that could be considered competitive. This approval can be withheld at Bb.Q Chicken's discretion. This stringent non-compete agreement is designed to protect Bb.Q Chicken's market position and the interests of its franchisees by preventing the dissemination of trade secrets, operational methods, and marketing techniques to competing businesses.