Can Chicken Guy develop and operate restaurants other than Chicken Guy restaurants in the Development Territory?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
The System (including the products sold under the Proprietary Marks) has been developed, and is designed, to function effectively in a wide variety of retail environments, many of which are not practically available to you. Accordingly, under the Development Agreement, we reserve to ourselves the right to: (1) operate, and license others to operate, restaurants identified in whole or in part by the name and mark "Chicken Guy!" in the Development Territory at Nontraditional Locations; (2) 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; (3) 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!" in the Development Territory; (4) merchandise and distribute products identified by some or all of the Proprietary Marks in the Development Territory through any other method or channel of distribution; and (5) sell and distribute products identified by some or all of the Proprietary Marks in the Development Territory 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.
Source: Item 12 — TERRITORY (FDD pages 34–36)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, both Chicken Guy and its affiliates retain the right to develop and operate restaurants other than Chicken Guy restaurants within the Development Territory. This is explicitly stated in Item 12 concerning territory. This right is reserved to Chicken Guy, regardless of whether the franchisee has a Development Agreement or a Franchise Agreement.
For a prospective franchisee, this means that even within their designated Development Territory or Protected Area, Chicken Guy reserves the right to operate or license others to operate different types of restaurants that are not branded as Chicken Guy. This could introduce competition from other restaurant concepts that Chicken Guy or its affiliates control. The franchisee will not be compensated should Chicken Guy choose to exercise this right.
This provision is relatively common in franchising, where franchisors often seek to diversify their interests and revenue streams. However, it's crucial for a potential Chicken Guy franchisee to understand that their territory is not entirely exclusive in terms of restaurant types. They may face competition from other restaurant brands operated or licensed by Chicken Guy within the same territory. This is a factor to consider when evaluating the potential market and financial projections for a Chicken Guy franchise.