What activities are prohibited by the non-competition covenant during the term of a Chicken Guy franchise?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE AGREEMENT | SUMMARY |
|---|---|---|
| q. Non-competition covenants during the term of the franchise | Section 21.C. | No diversion of any business or customer to any competitor; no interest in any restaurant business that that features chicken as a primary menu item (i.e., sales of chicken menu items comprise at least 20% of sales) or whose method of operation or trade dress is similar to that used in the System (subject to state law). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, during the franchise term, franchisees are restricted by a non-competition covenant. This covenant prohibits franchisees from diverting business or customers to any competitor.
Specifically, franchisees are barred from holding any interest in a restaurant business where chicken is a primary menu item, defined as chicken menu items comprising at least 20% of sales. The non-competition covenant also restricts franchisees from involvement in any restaurant business whose method of operation or trade dress is similar to that used in the Chicken Guy system.
These restrictions are subject to state law, meaning the enforceability and specific terms may vary depending on the franchisee's location. Franchisees should consult with legal counsel to understand how these non-competition terms apply in their specific state.