What is the definition of 'Protected Area' for Chicken Guy franchisees, in the context of post-termination restrictions?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
s or activity that may conflict with its obligations under this Agreement, except the operation of other Chicken Guy! Restaurants or other restaurants operated by Franchisee that are franchised by Chicken Guy or its affiliates.
- (4) Chicken Guy reserves the right, upon reasonable notice, to require that Franchisee participate in the Chicken Guy! Catering and/or Delivery Program to provide the catering and/or delivery services designated by Chicken Guy from the Franchised Restaurant to customers located within the Protected Area (as defined in Section 1.B.(1)). Franchisee must obtain all licenses and permits necessary for such participation and must comply with Chicken Guy's procedures and menu requirements, purchase all supplies, products and ingredients through Chicken Guy's approved and designated suppliers and otherwise follow the Manual with respect to the catering and/or delivery services.
B. Limited Exclusivity.
(1) Provided Franchisee is in compliance with this Agreement and any other agreements with Chicken Guy or its affiliates and is current on all obligations due Chicken Guy and its affiliates, during the term of this Agreement, Chicken Guy and its affiliates will not operate, or license others to operate, restaurants identified in whole or in part by the name and mark "CHICKEN GUY!" within the geographic area described on the attached Data Sheet ("Protected Area"). Notwithstanding the foregoing, Chicken Guy reserves to itself the rights to: (a) operate, and license others to operate, restaurants identified in whole or in part by the name and mark "CHICKEN GUY!" and/or utilizing the System in the Protected Area that are located in airports, train stations, bus stations, service plazas, stadiums, arenas, gas stations, convention centers, military facilities, convenience stores, schools, colleges, universities, hospitals, theme parks, office buildings, food courts, venues in which foodservice is or may be provided by a master concessionaire or contract foodservice provider, Indian reservations, casinos or any similar captive market location not reasonably available to Franchisee; (b) award national or regional licenses to third
parties to sell products under the name and mark "CHICKEN GUY!" in foodservice facilities primarily identified by the third party's trademark; (c) develop and operate, and license others to develop and operate, restaurants other than restaurants identified in whole or in part by the name and mark "CHICKEN GUY!" and/or utilizing the System in the Protected Area; (d) merchandise and distribute products identified by some or all of the Proprietary Marks in the Protected Area through any other method or channel of distribution; and (e) sell and distribute products identified by some or all of the Proprietary Marks in the Protected Area to restaurants other than restaurants identified in whole or in part by the name and mark "CHICKEN GUY!," provided those restaurants are not licensed to use the Proprietary Marks in connection with their retail sales.
- (2) The restrictions contained in this Section 1.B.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, a franchisee's 'Protected Area' is defined in relation to post-termination restrictions. During the term of the franchise agreement, Chicken Guy and its affiliates will not operate or license others to operate Chicken Guy restaurants within the geographic area described on the attached Data Sheet, provided the franchisee is in compliance with the agreement and current on all obligations. However, this exclusivity has several exceptions. Chicken Guy retains the right to operate or license restaurants in locations such as airports, train stations, stadiums, military facilities, and other similar captive market locations, even within the franchisee's Protected Area. They can also award national or regional licenses to third parties and operate other types of restaurants under different names.
Following the expiration or termination of the franchise agreement, the restrictions on the franchisee apply within the Protected Area and within 2 miles of any then-existing Chicken Guy restaurant, unless otherwise approved in writing by Chicken Guy. This means that for one year after leaving the Chicken Guy system, a former franchisee is restricted from operating a competing business within their Protected Area or within 2 miles of an existing Chicken Guy restaurant. This restriction does not apply to the franchisee's existing restaurant or foodservice operations identified in the attached Data Sheet or other restaurants franchised by Chicken Guy or its affiliates.
These post-termination restrictions are designed to protect Chicken Guy's brand and market share. The franchisor can seek injunctive relief to enforce these restrictions, meaning they can go to court to prevent a former franchisee from violating the terms of the agreement. The FDD also states that if any part of these restrictions is found to be unreasonable in time or distance, the court may reduce the time or distance to what is deemed reasonable. Prospective franchisees should carefully review the Data Sheet attached to the Franchise Agreement to understand the specific geographic boundaries of their Protected Area and the implications of these post-termination restrictions.