Does the Chesters franchise agreement contain non-competition covenants after the franchise is terminated or expires?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in franchise or other agreement | Summary | |
|---|---|---|---|
| q. | Non-competition covenants during the term of the franchise | 14 of Agreement | You and your owners are not allowed to have any direct or indirect controlling or noncontrolling interest as an owner in, or perform services as a director, officer, manager, employee, consultant, representative, or agent for, a Competitive Business at the Restaurant's location or within a 5-mile radius from the location. "Competitive Business" means (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. |
| r. | Non-competition covenants after the franchise is terminated or expires | Not Applicable | The Agreement does not address this issue. |
| i. | Franchisee’s obligations on termination/ non-renewal | 20 of Agreement | Obligations include cease operating Restaurant and representing yourself as present or former franchisee; cease using confidential information, Marks, and trade dress; complete de-identification; and payment of amounts due. Also see (r) below. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 35–38)
What This Means (2025 FDD)
According to the 2025 Chesters Franchise Disclosure Document, the franchise agreement does not contain non-competition covenants after the franchise is terminated or expires. The agreement does, however, contain non-competition covenants during the term of the franchise.
During the franchise term, the franchisee and their owners are not allowed to have any direct or indirect controlling or noncontrolling interest as an owner in, or perform services as a director, officer, manager, employee, consultant, representative, or agent for, a Competitive Business at the Restaurant's location or within a 5-mile radius from the location. A "Competitive Business" includes businesses preparing and selling breaded chicken products or similar side items that Chesters requires the Restaurant to sell. This includes businesses like Charley Biggs, Champs Chicken, Krispy Krunchy Chicken, Cooper's Express, Broaster Chicken, and Chicken King. It also includes businesses that include a "Restaurant-in-Store" unit where the Restaurant-in-Store unit derives more than twenty-percent (20%) of its revenue from selling chicken, or businesses granting franchises or licenses to others to operate the types of businesses described.
The absence of post-term non-competition covenants in the Chesters franchise agreement provides more flexibility for the franchisee after the agreement ends. However, the franchisee is still obligated to cease operating the Restaurant and representing themselves as a current or former franchisee, cease using confidential information, Marks, and trade dress, complete de-identification, and pay all amounts due.