What is the duration of the non-compete agreement for Chicken Guy franchisees after the termination or expiration of the franchise agreement?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) During the term of this Agreement, there is no geographical limitation on this restriction.
Following the expiration or earlier termination of the term of this Agreement, this restriction shall apply within the Protected Area 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 Franchisee'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 Franchisee that are franchised by Chicken Guy or its affiliates.
- (4) 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.
If, at any time during the 1-year period following expiration or earlier termination of this Agreement, Franchisee fails to comply with its obligations under this Section, that period of noncompliance will not be credited toward Franchisee's satisfaction of the 1-year obligation.
- (5) Franchisee further covenants and agrees that, for a period of 1 year following the expiration or earlier termination of this Agreement, Franchisee will not, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with any person, firm, partnership, corporation, or other entity, sell, assign, lease or transfer the Franchised Location to any person, firm, partnership, corporation, or other entity which Franchisee knows, or has reason to know, intends to operate a restaurant business at the Franchised Location that would violate Sections 21.C.(2)(c) or 21.C.(3).
Franchisee, by the terms of any conveyance selling, assigning, leasing or transferring its interest in the Franchised Location, shall include these restrictive covenants as are necessary to ensure that a restaurant business that would violate Sections 21.C.(2)(c) or 21.C.(3) is not operated at the Franchised Location for this 1 year period, and Franchisee shall take all steps necessary to ensure that these restrictive covenants become a matter of public record.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, the non-compete agreement lasts for one year following the expiration or termination of the franchise agreement. This restriction applies within the franchisee's Protected Area and within 2 miles of any then-existing Chicken Guy restaurant, unless Chicken Guy approves otherwise in writing. However, this restriction does not apply to the franchisee'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 the franchisee that are franchised by Chicken Guy or its affiliates.
Specifically, the franchisee agrees not to sell, assign, lease, or transfer the Franchised Location to any entity that the franchisee knows intends to operate a restaurant business that would violate certain operational restrictions. The franchisee must include restrictive covenants in any conveyance selling, assigning, leasing, or transferring its interest in the Franchised Location to ensure that a violating restaurant business is not operated there for this one-year period. The franchisee is also responsible for taking steps to ensure these restrictive covenants become a matter of public record.
This means that after leaving the Chicken Guy system, a former franchisee is limited in their ability to operate a competing business near their old location or other Chicken Guy locations for a year. This is a fairly standard practice in franchising to protect the brand and other franchisees from direct competition from someone who has inside knowledge of the Chicken Guy operations. Prospective franchisees should carefully consider the implications of this non-compete clause, especially if they have plans to open another restaurant concept after their Chicken Guy franchise term ends.