During the term of the Chesters franchise agreement, what is the geographic limit of the non-competition covenant?
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. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 35–38)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, during the term of the franchise agreement, franchisees and their owners are restricted from having any ownership interest in, or performing services for, a Competitive Business. This restriction applies at the Restaurant's location or within a 5-mile radius from the location.
A Competitive Business is defined as (a) businesses preparing and selling breaded chicken products or similar side items that Chesters requires the Restaurant to sell, including businesses like Charley Biggs, Champs Chicken, Krispy Krunchy Chicken, Cooper's Express, Broaster Chicken, and Chicken King, (b) businesses that include a 'Restaurant-in-Store' unit deriving more than 20% of its revenue from chicken sales, or (c) businesses 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.
This means that during the term of the Chesters franchise agreement, a franchisee cannot own or work for a competing chicken business within the immediate location of their Chesters restaurant or within a five-mile radius. This restriction is fairly standard in the franchise industry to protect the brand's market share and prevent franchisees from directly competing with the Chesters business they operate. Prospective franchisees should carefully consider this restriction when evaluating potential locations and business opportunities.