What is the definition of a competitive restaurant business that the Chicken Guy developer is restricted from being involved with?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Own, maintain, operate, engage in, advise, help, make loans to, or have any interest in, either directly or indirectly, any restaurant business: (i) that features chicken as a primary menu item (i.e., sales of chicken menu items comprise at least 20% of sales); or (ii) whose method of operation or trade dress is similar to that employed in the System.
During the Development Term, there is no geographical limitation on this restriction.
Following the expiration or earlier termination of the Development Term, this restriction shall apply within the Development Territory, within 2 miles of the border of the Development Territory and within 2 miles of any then-existing Chicken Guy!
Restaurant, except as otherwise approved in writing by Chicken Guy.
This restriction shall not apply to Developer's existing restaurant or foodservice operations, if any, which are identified in the attached Data Sheet, nor shall it apply to other restaurants operated by Developer that are franchised by Chicken Guy or its affiliates.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, a developer is restricted from involvement with a competitive restaurant business during the Development Term and for one year after, with some geographical limitations. A competitive restaurant business is defined as one that either features chicken as a primary menu item, meaning chicken menu items comprise at least 20% of sales, or a restaurant whose method of operation or trade dress is similar to that employed in the Chicken Guy system.
During the Development Term, this restriction has no geographical limitation. After the Development Term ends, the restriction applies within the Development Territory, within two miles of the border of the Development Territory, and within two miles of any existing Chicken Guy restaurant. However, this restriction does not apply to the developer's existing restaurant or foodservice operations, if any, that are identified in the attached Data Sheet, nor does it apply to other restaurants operated by the developer that are franchised by Chicken Guy or its affiliates.
If a developer violates these restrictions after the agreement ends, Chicken Guy can charge the developer a fee equal to the then-current Initial Franchise Fee for franchised Chicken Guy restaurants and 8% of the gross sales of the violating restaurant business until the end of the one-year restriction period. Chicken Guy can also seek injunctive relief to enforce these covenants. The franchisor also has the right to reduce the scope of any covenant in this section with written notice to the developer, who must then comply with the modified covenant.