Is Charley Biggs considered a 'Competitive Business' for a Chesters franchise?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
In this Agreement, the term "Competitive Business" means any (a) business preparing and selling to customers breaded chicken products or the other types of products (e.g., "sides" such as potato wedges) that we require the Restaurant to prepare and sell as of the Effective Date, including, but not limited to, such businesses as Charley Biggs, Champs Chicken, Krispy Krunchy Chicken, Cooper's Express, Broaster Chicken, and Chicken King, (b) business that includes a "Restaurant-in-Store" unit where the Restaurant-in-Store unit derives more than twenty-percent (20%) of its revenue from selling chicken, or (c) business granting franchises or licenses to others to operate the types of businesses described in clauses (a) or (b), other than a CHESTER'S Restaurant operated under an agreement with us.
During this Agreement's term, you agree that neither you nor your owners will have any direct or indirect, controlling or non-controlling interest as an owner in, or perform services as a director, officer, manager, employee, consultant, representative, or agent for, a Competitive Business at the Location or within a five (5)-mile radius from the Location.
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, Charley Biggs is explicitly considered a 'Competitive Business.' The agreement defines a 'Competitive Business' as any business that prepares and sells breaded chicken products or similar side items that Chesters requires its restaurants to sell. This definition includes businesses such as Charley Biggs, Champs Chicken, Krispy Krunchy Chicken, Cooper's Express, Broaster Chicken, and Chicken King.
This classification has significant implications for a prospective Chesters franchisee. During the term of the franchise agreement, franchisees and their owners are prohibited from having any direct or indirect interest in, or performing services for, a 'Competitive Business.' This restriction applies to ownership, directorship, management, employment, consultancy, or agency roles. The restriction is in place at the Chesters location and within a five-mile radius of that location.
Chesters imposes this restriction to protect its brand and market share. If a franchisee violates this restriction by operating or being involved with a 'Competitive Business,' Chesters can impose liquidated damages. The FDD states that for each violation of the restriction on operating a Competitive Business, the franchisee must pay Chesters $10,000 as liquidated damages. This payment is intended to cover the 'Brand Damages' that Chesters would suffer, including lost market penetration, customer confusion, and lost opportunity costs. Chesters considers these damages difficult to estimate accurately, justifying the fixed liquidated damages amount.
This clause is designed to prevent franchisees from diverting resources, knowledge, or customers to competing businesses, thereby safeguarding Chesters's investment and brand integrity. Prospective franchisees should carefully consider this restriction and ensure they do not have any conflicting interests or plans that could violate the competitive business clause.