During the Development Term for Chicken Guy, can the Developer divert business from any restaurant franchised or operated by Chicken Guy or its affiliates?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Divert or attempt to divert any business or customer, or potential business or customer, of any restaurant franchised or operated by Chicken Guy or its affiliates to any competitor, by direct or indirect inducement or otherwise.
(b) Own, maintain, operate, engage in, advise, help, make loans to, or have any interest in, either directly or indirectly, any restaurant business: (i) that features chicken as a primary menu item (i.e., sales of chicken menu items comprise at least 20% of sales); or (ii) whose method of operation or trade dress is similar to that employed in the System.
During the Development Term, there is no geographical limitation on this restriction.
Following the expiration or earlier termination of the Development Term, this restriction shall apply within the Development Territory, within 2 miles of the border of the Development Territory and within 2 miles of any then-existing Chicken Guy!
Restaurant, except as otherwise approved in writing by Chicken Guy.
This restriction shall not apply to Developer's existing restaurant or foodservice operations, if any, which are identified in the attached Data Sheet, nor shall it apply to other restaurants operated by Developer that are franchised by Chicken Guy or its affiliates.
- (3) If any part of these restrictions is found to be unreasonable in time or distance, each month of time or mile of distance may be deemed a separate unit so that the time or distance may be reduced by appropriate order of the court to that deemed reasonable.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, during the Development Term, a developer is prohibited from diverting or attempting to divert business away from any Chicken Guy restaurant or its affiliates to a competitor. This includes any direct or indirect actions aimed at inducing customers to patronize a competing establishment.
Furthermore, the developer is restricted from owning, operating, or having any interest in a restaurant business that features chicken as a primary menu item (at least 20% of sales) or whose operational methods or trade dress are similar to the Chicken Guy system. This restriction applies without geographical limitation during the Development Term.
After the Development Term expires or is terminated, these restrictions apply within the Development Territory, within two miles of its border, and within two miles of any existing Chicken Guy restaurant, unless Chicken Guy provides written approval otherwise. These restrictions do not apply to the developer's existing restaurant or foodservice operations, if any, that are identified in the attached Data Sheet, or to other restaurants operated by the developer that are franchised by Chicken Guy or its affiliates. If any part of these restrictions is found to be unreasonable, the terms may be adjusted by a court.