After the Development Agreement terminates, is a Chicken Guy developer allowed to assist anyone not licensed by Chicken Guy to construct a foodservice outlet substantially similar to a Chicken Guy! Restaurant, except with respect to a restaurant franchised by Chicken Guy or its affiliates which is then open and operating pursuant to an effective franchise agreement?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Developer Prohibited from Engaging in Certain Conduct. Developer shall not, except with respect to a restaurant franchised by Chicken Guy or its affiliates which is then open and operating pursuant to an effective franchise agreement: (1) operate or do business under any name or in any manner that might tend to give the public the impression that Developer is connected in any way with Chicken Guy or its affiliates or has any right to use the System or the Proprietary Marks; (2) make, use or avail itself of any of the materials or information furnished or disclosed by Chicken Guy or its affiliates under this Agreement or disclose or reveal any such materials or information or any portion thereof to anyone else; or (3) assist anyone not licensed by Chicken Guy or its affiliates to construct or equip a foodservice outlet substantially similar to a Chicken Guy! Restaurant.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to the 2025 Chicken Guy FDD, after the termination or expiration of the Development Agreement, a developer is prohibited from assisting anyone not licensed by Chicken Guy or its affiliates to construct or equip a foodservice outlet that is substantially similar to a Chicken Guy! Restaurant. However, this restriction does not apply to restaurants franchised by Chicken Guy or its affiliates that are open and operating under an effective franchise agreement.
This obligation is outlined in Section 14.A.(4) of the Development Agreement, which states that the developer and all persons and entities subject to the covenants contained in Section 12 must continue to abide by those covenants and shall not, directly or indirectly, take any action that violates those covenants. Section 14.C.(3) specifically prohibits the developer from assisting anyone not licensed by Chicken Guy or its affiliates to construct or equip a foodservice outlet substantially similar to a Chicken Guy! Restaurant.
This restriction is designed to protect the Chicken Guy system and brand by preventing former developers from using their knowledge and experience gained during the development agreement to benefit competitors. The exception for restaurants franchised by Chicken Guy or its affiliates ensures that the developer is not restricted from supporting existing Chicken Guy franchises.