What is the geographic restriction on a former Browns Chicken franchisee regarding competing businesses?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
If the Franchise expires, is not renewed or is terminated prior to its expiration for any reason, Franchisee agrees that for a period of eighteen (18) months commencing on the effective
date of expiration or termination of the Franchise, or the date on which Franchisee ceases to conduct the business conducted pursuant to this Agreement, whichever is later, it will not:
- (1) engage, directly or indirectly, as an owner (except of publicly-traded securities), partner, director, officer, employee, consultant, lessor, lender, representative or agent, or in any other capacity in a retail food service business featuring cooked chicken, pasta, or sandwiches, and which is located within five (5) miles of the Store or any BROWN's Store, or in any entity which is granting franchises or licenses for retail food service businesses featuring cooked chicken, pasta or sandwiches; or
- (2) lease, let or sublease any real property or personal property to any person, corporation, partnership or any other entity engaged directly or indirectly in any retail food service business featuring cooked chicken, pasta or sandwiches located within five (5) miles of the Store or any BROWN's Store.
To the extent that this Paragraph E of Section 21 is deemed unenforceable by virtue of its scope in terms of area or length of time or activity restrained, but may be made enforceable by reduction of any or all thereof, Franchisee and Brown agree that the same shall be enforced to the fullest extent permissible under the laws and public policies applied in the jurisdiction in which enforcement is sought.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, a franchisee is restricted from engaging in competitive business activities after the franchise expires, is not renewed, or is terminated early. This restriction lasts for 18 months, starting from the date of expiration or termination, or the date the franchisee stops conducting business, whichever is later.
The geographic scope of this restriction prevents the franchisee from being involved in a retail food service business featuring cooked chicken, pasta, or sandwiches within a five-mile radius of the former Browns Chicken store or any other Browns Chicken store. This includes various roles such as owner, partner, director, officer, employee, consultant, lessor, lender, representative, or agent. The restriction also extends to preventing the franchisee from leasing property to any entity engaged in a similar retail food service business within the same five-mile radius.
This non-compete clause aims to protect Browns Chicken's market share and brand integrity by preventing former franchisees from using their knowledge and experience gained during the franchise term to directly compete with the brand in close proximity. The agreement also specifies that if any part of the restriction is deemed unenforceable due to its scope, the parties agree that it should be enforced to the fullest extent permissible under applicable laws.
Prospective franchisees should carefully consider these restrictions, as they could significantly limit their business opportunities in the food service industry following the end of their franchise agreement. It is advisable to seek legal counsel to fully understand the implications of this clause and to negotiate terms if possible.