Can Chicken Guy develop and operate restaurants other than Chicken Guy restaurants within the Protected Area?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
We and our affiliates may, however: (1) 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 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!" and/or utilizing the System
in the Protected Area; (4) 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 (5) 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.
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 that are not branded as Chicken Guy, even within a franchisee's protected area. This applies whether the franchisee has signed a standard Franchise Agreement or a Development Agreement. This means that while a franchisee may have some territorial protection for Chicken Guy restaurants, Chicken Guy itself is not restricted from opening other types of restaurants within that same area.
For a prospective franchisee, this represents a potential risk. Chicken Guy could introduce competing restaurant concepts within the franchisee's protected area, potentially drawing customers away from the Chicken Guy franchise. This is a fairly common practice in the franchise industry, where franchisors often seek to diversify their holdings and explore different market segments.
It is important to note that Chicken Guy is not obligated to compensate franchisees for exercising these rights. Franchisees should carefully consider the potential impact of this clause on their business and evaluate the market conditions in their area to assess the likelihood of Chicken Guy introducing competing restaurant concepts. Understanding the competitive landscape and the franchisor's long-term strategy is crucial for making an informed investment decision.
Prospective franchisees should inquire about Chicken Guy's plans for developing other restaurant concepts and how those concepts might interact with existing Chicken Guy franchises. Understanding the potential for internal competition is a key part of due diligence before investing in a Chicken Guy franchise.