What is the geographic scope of the non-competition covenant during the term of the 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). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, during the franchise term, a franchisee cannot divert business or customers to a competitor. Also, a franchisee cannot have an interest in a restaurant business where chicken is a primary menu item (at least 20% of sales) or that has a similar method of operation or trade dress to the Chicken Guy system. The geographic scope of this restriction isn't explicitly defined in terms of miles or a specific territory, but rather focuses on preventing direct competition through business activities and interests. This is subject to state law, which may impact the enforceability or interpretation of these non-competition terms.
This means that while operating a Chicken Guy franchise, a franchisee is restricted from engaging in any competitive restaurant business. This includes owning, operating, or having a financial stake in a competing chicken restaurant or any restaurant that mimics the Chicken Guy model. The restriction applies to any activity that could take away business from the Chicken Guy franchise.
Prospective franchisees should be aware of these restrictions and carefully consider their implications. It is important to understand how state laws might affect the enforceability of these covenants. Franchisees should seek legal counsel to fully understand the scope and limitations of the non-competition agreement in their specific state.