For how long after the expiration or termination of the Development Term is the Developer restricted from engaging in competitive businesses with Chicken Guy?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) Accordingly, Developer covenants and agrees that during the Development Term, and for a continuous period of 1 year following its expiration or earlier termination, Developer shall not, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with, any person, firm, partnership, corporation, or other entity:
- (b) Own, maintain, operate, engage in, advise, help, make loans to, or have any interest in, either directly or indirectly, any restaurant business: (i) that features chicken as a primary menu item (i.e., sales of chicken menu items comprise at least 20% of sales); or (ii) whose method of operation or trade dress is similar to that employed in the System.
During the Development Term, there is no geographical limitation on this restriction.
Following the expiration or earlier termination of the Development Term, this restriction shall apply within the Development Territory, within 2 miles of the border of the Development Territory 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 Developer'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 Developer that are franchised by Chicken Guy or its affiliates.
If, at any time during the 1-year period following expiration or earlier termination of this Agreement, Developer fails to comply with its obligations under this Section, that period of noncompliance will not be credited toward Developer's satisfaction of the 1-year obligation.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, a developer is restricted from engaging in competitive businesses for one year following the expiration or termination of the Development Term. Specifically, the developer cannot own, maintain, operate, engage in, advise, help, make loans to, or have any interest in any restaurant business that features chicken as a primary menu item (at least 20% of sales) or whose method of operation or trade dress is similar to the Chicken Guy system.
During the Development Term, this restriction has no geographical limitation. However, after the Development Term expires or terminates, the restriction applies within the Development Territory, within two miles of its border, and within two miles of any existing Chicken Guy restaurant. This geographical restriction can be altered with written approval from Chicken Guy. The restriction does not apply to the developer's existing restaurant or foodservice operations listed in the Data Sheet or to other restaurants franchised by Chicken Guy or its affiliates.
It's important to note that if the developer fails to comply with these restrictions at any time during the one-year period, the period of noncompliance will not count towards fulfilling the one-year obligation. Chicken Guy also has the right to reduce the scope of any covenant with written notice to the developer, who must then comply with the modified covenant. If the developer breaches the non-compete agreement, Chicken Guy can charge a fee equal to the then-current Initial Franchise Fee and 8% of the gross sales of the violating restaurant business until the end of the one-year period.