What is the definition of a 'Protected Area' for a Chicken Guy franchise?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
If you comply with the Franchise Agreement and any other agreements with us or our affiliates and are current on all obligations due us and our affiliates, during the term of the Franchise Agreement, we and our affiliates will not operate, or license others to operate, Chicken Guy! Restaurants in a geographic area surrounding the Franchised Location ("Protected Area"). This restriction applies only to Chicken Guy and does not apply to restaurants identified in whole or in part by the name and mark "Chicken Guy!" under construction or in operation in the Protected Area as of the date of the Franchise Agreement. The size of the Protected Area will vary depending on, among other things, the location in which you wish to operate the Franchised Restaurant. Typically, the Protected Area will be set as a radius around the Franchised Location. The perimeters of the Protected Area may be described by specific street boundaries, county lines, state lines, municipal boundaries, railroad tracks, or other similar boundary descriptions. Factors that we will use in order to determine the Protected Area include demographics, population density and number of households in the area, the growth profile of the populations within the area, the competitive environment in that market, and other factors that we will take into account. If you develop Franchised Restaurants under a Development Agreement, we will determine the Protected Area for each Franchised Restaurant according to the policies that are then in place when you sign each Franchise Agreement.
Source: Item 12 — TERRITORY (FDD pages 34–36)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, a 'Protected Area' is a geographic area surrounding the franchised location where Chicken Guy and its affiliates will not operate or license others to operate Chicken Guy restaurants during the term of the Franchise Agreement, provided the franchisee remains in compliance with all agreements and obligations. This restriction does not apply to Chicken Guy restaurants under construction or in operation in the Protected Area as of the date of the Franchise Agreement. The grant of a protected area is only applicable if you sign a Franchise Agreement without a Development Agreement.
The size of the Protected Area varies depending on factors such as the location of the restaurant. Typically, it is defined as a radius around the franchised location, but the perimeters may also be described by specific street boundaries, county lines, state lines, municipal boundaries, railroad tracks, or other similar boundary descriptions. Chicken Guy considers demographics, population density, number of households, population growth, and the competitive environment when determining the Protected Area.
However, Chicken Guy retains significant rights within the Protected Area. They may operate or license others to operate Chicken Guy restaurants at Nontraditional Locations, award national or regional licenses to sell Chicken Guy products in foodservice facilities identified by a third party's trademark, develop and operate other types of restaurants, merchandise and distribute products using the Chicken Guy trademarks through other channels, and sell and distribute products using the trademarks to other restaurants that are not licensed to use the trademarks for retail sales. Prospective franchisees should carefully consider these exceptions, as they allow for potential competition from Chicken Guy itself within the Protected Area.
It is also important to note that Chicken Guy is not obligated to compensate the franchisee for exercising any rights it reserves within the Protected Area. Furthermore, franchisees do not receive any exclusive territory under the Franchise Agreement and may face competition from other franchisees, company-owned outlets, or other channels of distribution and competitive brands controlled by Chicken Guy. These factors highlight the importance of thoroughly evaluating the specific location and market conditions before investing in a Chicken Guy franchise.