What geographic area is covered by the post-termination non-compete for a Chicken Guy franchise?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE AGREEMENT | SUMMARY |
|---|---|---|
| q. Non-competition covenants during the term of the franchise | Section 21.C. | No diversion of any business or customer to any competitor; no interest in any restaurant business that that features chicken as a primary menu item (i.e., sales of chicken menu items comprise at least 20% of sales) or whose method of operation or trade dress is similar to that used in the System (subject to state law). |
| r. Non-competition covenants after the franchise is terminated or expires | Section 21.C. | No activity as described in q. above for one year within the Protected Area and within two miles of any then-existing Chicken Guy! Restaurant. If you violate the post-termination non-competition provisions, you must pay liquidated damages equal to our then-current Initial Franchise Fee and 8% of the Gross Sales of the competing business until the expiration of the non- competition period (subject to state law). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, the post-termination non-compete agreement restricts a franchisee from engaging in activities similar to Chicken Guy for one year. This restriction applies within the franchisee's Protected Area, as well as within two miles of the border of the Development Territory, and within two miles of any then-existing Chicken Guy restaurant.
This means that after the franchise agreement is terminated or expires, the franchisee cannot operate or be involved in a competing business within these specified areas. A competing business is defined as one that features chicken as a primary menu item (at least 20% of sales) or has a similar method of operation or trade dress to the Chicken Guy system.
If a franchisee violates these post-termination non-compete provisions, they must pay liquidated damages. These damages are equal to Chicken Guy's then-current Initial Franchise Fee and 8% of the Gross Sales of the competing business until the non-competition period expires. However, these non-compete provisions are subject to state law, which may affect their enforceability and specific terms.