Is Chick-fil-A restricted from establishing other restaurants near a franchisee's location?
Chick_Fil_A Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 12: Territory]
You will not receive an exclusive or protected territory, express or implied. The Franchise Agreement contains no exclusive grant, exclusive area, exclusive territorial rights, protected territory or right for you to exclude, disapprove, control or impose conditions on the location, development or operation of current or future Chick-fil-A Restaurants. The sales and customer trading patterns that a Chick-fil-A Restaurant experiences at any particular time are subject to change by reason of many factors, including our ongoing development of Chick-fil-A Restaurants, and franchised Operators do not have a right and should not expect that these patterns will never change. Chick-fil-A has the right to establish other Operator-run, Licensee-run or company-owned or operated restaurants both within and outside the geographic and customer trading pattern areas surrounding your franchised Chick-fil-A Restaurant business location, and reserves the right to use other channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct marketing both within and outside the geographic and customer trading pattern areas surrounding your franchised Chickfil-A Restaurant business location. Any internal policies that we may develop, apply and modify periodically in connection with decisions to develop new Chick-fil-A Restaurants do not grant you any contract rights, are not part of your contract, and do not modify or affect Chick-fil-A's or your contract rights and obligations under the Franchise Agreement. Chick-fil-A's internal programs and policies are subject to change or cancellation at any time by Chick-fil-A.
You will not receive an exclusive territory. You may face competition from other franchisees or licensees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
As described in Item 1, certain affiliates of Chick-fil-A operate certain Dwarf House restaurants and Truett's Grill restaurants, which are licensed to sell Chick-fil-A products. The Dwarf House restaurants are modeled after the Dwarf Grill restaurant first opened by S. Truett Cathy in Hapeville, Georgia, in 1946. (The eighteen Dwarf House and Truett's Grill restaurants that currently exist are owned by our affiliate, Truett's Group, LLC.) Depending on the proximity of a Dwarf House or Truett's Grill restaurant to your franchised Chick-fil-A Restaurant, a Dwarf House or Truett's Grill restaurant may compete with your franchised business.
As described above, Chick-fil-A licenses Chick-fil-A Licensees and continues to offer licenses to prospective Licensees who have access to certain non-traditional locations such as schools, workplaces, universities, airports, hospitals and other similar captive audience locations to sell Chick-fil-A brand products at these locations. Chick-fil-A also grants licenses to franchised Operators and continues to offer licenses to prospective franchised Operators to operate franchised Chick-fil-A Restaurants as (i) captive venue units in office buildings, big-box stores, downtown areas, schools, universities, sports stadiums, theme parks and other similar captive audience locations and (ii) delivery kitchen units in delivery kitchen locations, for which Chick-fil-A has obtained the rights to conduct a restaurant business or concession. Depending on the proximity of a Chick-fil-A Licensed Unit or other Chick-fil-A Restaurant to your franchised Chick-fil-A Restaurant, a Chick-fil-A Licensed Unit or other Chick-fil-A Restaurant may compete with your franchised business. Chick-fil-A has never offered a franchise other than for a Licensed Unit or a franchised Chick-fil-A Restaurant in the same or any other line of business, although it reserves the right to do so whether by acquisition or start-up.
Chick-fil-A may operate or license others to operate any business competitive with the business of its Operators and/or its Licensees under a name other than Chick-fil-A. Chick-fil-A is currently conducting a test of its affiliate New Mile Ventures, LLC's delivery kitchen concept called Little Blue Menu ® featuring several new virtual restaurants as well as offering Chick-fil-A products. As of the date of this Disclosure Document, Chick-fil-A has not formulated any plans or policies to operate or license others to operate any business under a different name, but Chick-fil-A or its affiliates may establish other or similar businesses at some future date.
Source: Item 12 — Territory (FDD pages 59–60)
What This Means (2025 FDD)
According to Chick-fil-A's 2025 Franchise Disclosure Document, franchisees are not granted exclusive territories. This means Chick-fil-A retains the right to establish other Chick-fil-A restaurants, whether operated by other franchisees, licensees, or the company itself, in proximity to a franchisee's location. Additionally, Chick-fil-A can utilize other channels of distribution, such as internet sales or direct marketing, both within and outside the area surrounding a franchisee's restaurant. This lack of territorial protection is a significant factor for prospective franchisees to consider.
The FDD emphasizes that sales and customer trading patterns can change due to various factors, including Chick-fil-A's ongoing development of new restaurants. Franchisees should not expect these patterns to remain constant. Chick-fil-A also has the right to operate or license businesses competitive with Chick-fil-A under different names. One example cited in the FDD is Chick-fil-A's test of its affiliate New Mile Ventures, LLC's delivery kitchen concept called Little Blue Menu, which features virtual restaurants and Chick-fil-A products.
Furthermore, certain affiliates of Chick-fil-A operate Dwarf House and Truett's Grill restaurants, which are licensed to sell Chick-fil-A products. Depending on their proximity, these restaurants may compete with a franchisee's Chick-fil-A Restaurant. Chick-fil-A also licenses Chick-fil-A units in non-traditional locations like schools, workplaces, universities, airports, and hospitals. These licensed units, as well as delivery kitchen units, may also compete with a franchisee's restaurant depending on their location. Given the potential for competition from various sources, prospective franchisees should carefully evaluate the market and potential customer base before investing in a Chick-fil-A franchise.