Will a Chicken Guy franchisee acquire any interest in the System?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Best Efforts. During the term of this Agreement, Franchisee and the Operating Principal shall devote their best efforts to the development, management and operation of the Franchised Restaurant.
B. Confidentiality
- (1) Franchisee acknowledges and agrees that: (a) Chicken Guy owns all right, title and interest in and to the System; (b) the System consists of trade secrets and confidential and proprietary information and know-how that gives Chicken Guy and its affiliates a competitive advantage; (c) Chicken Guy and its affiliates have taken all measures necessary to protect the trade secrets and the confidentiality of the proprietary information and know-how comprising the System; (d) all material or other information now or hereafter provided or disclosed to Franchisee regarding the System is disclosed in confidence; (e) Franchisee has no right to disclose any part of the System to anyone who is not an employee of Franchisee; (f) Franchisee will disclose to its employees only those parts of the System that an employee needs to know; (g) Franchisee will have a system in place to ensure its employees keep confidential Chicken Guy's trade secrets and confidential and proprietary information, and, if requested by Chicken Guy, Franchisee shall obtain from those of its employees designated by Chicken Guy an executed Confidential Disclosure Agreement in the form prescribed by Chicken Guy; (h) Franchisee will not acquire any interest in the System; and (i) Franchisee's use or duplication of the System or any part of the System in any other business would constitute an unfair method of competition, for which Chicken Guy would be entitled to all legal and equitable remedies, including injunctive relief, without posting a bond.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Chicken Guy FDD, franchisees will not acquire any ownership interest in the Chicken Guy system. The FDD specifies that Chicken Guy owns all rights, titles, and interests in the system, which includes trade secrets, confidential information, and proprietary know-how. Franchisees are granted a license to use the system to operate a Chicken Guy restaurant, but this license does not equate to ownership.
This means that while franchisees can benefit from using the established Chicken Guy system and brand, they do not gain any equity or ownership stake in the underlying intellectual property or the overall franchise system. The franchisee's rights are limited to those specifically granted in the franchise agreement, such as the right to operate a restaurant using the Chicken Guy system at an approved location.
This arrangement is typical in franchising, where the franchisor retains ownership of the brand and system, and franchisees pay for the right to use it. This allows Chicken Guy to maintain control over its brand standards and ensure consistency across all franchise locations. Franchisees should be aware that any improvements or concepts they develop related to the system automatically become the property of Chicken Guy without any payment to the franchisee.