Does the Chicken Guy Franchise Agreement prohibit operating restaurants outside the Protected Area?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchise Agreement does not prohibit us or our affiliates from: (1) operating, and licensing others to operate, during the term of the Franchise Agreement, restaurants identified in whole or in part by the name and mark "Chicken Guy!" at any location outside of the Protected Area; (2) operating, and licensing others to operate, after the Franchise Agreement terminates or expires, restaurants identified in whole or in part by the name and mark "Chicken Guy!" at any location; and (3) operating, and licensing others to operate, at any location, during the term of the Franchise Agreement or after the Franchise Agreement expires or terminates, any type of restaurant other than a restaurant identified in whole or in part by the name and mark "Chicken Guy!." We are not required to compensate you for exercising any rights reserved to us in the Protected Area.
Source: Item 12 — TERRITORY (FDD pages 34–36)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the Franchise Agreement does not prohibit Chicken Guy or its affiliates from operating or licensing others to operate restaurants identified by the Chicken Guy name and mark at any location outside of the Protected Area during the term of the Franchise Agreement. This means that while a franchisee is granted a Protected Area, Chicken Guy retains the right to expand its brand outside of that area, potentially near a franchisee's location, without violating the agreement.
This also applies after the Franchise Agreement terminates or expires, Chicken Guy can operate or license others to operate Chicken Guy restaurants at any location. Furthermore, Chicken Guy is not restricted from operating or licensing other types of restaurants that are not identified by the Chicken Guy name and mark at any location, whether during the term of the agreement or after it expires or terminates. Chicken Guy is not required to compensate the franchisee for exercising any rights reserved to them in the Protected Area.
This clause highlights a potential risk for franchisees. While they are granted a Protected Area, Chicken Guy retains considerable freedom to operate or license other Chicken Guy restaurants outside that area, which could intensify competition. Prospective franchisees should carefully consider the potential impact of this clause on their business and market and discuss this with the franchisor.