For how long after the Chicken Guy franchise agreement expires or terminates is the franchisee prohibited from diverting business from Chicken Guy restaurants?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) Accordingly, Franchisee covenants and agrees that during the term of this Agreement, and for a continuous period of 1 year following its expiration or earlier termination, Franchisee 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:
(a) Divert or attempt to divert any business or customer, or potential business or customer, of any restaurant franchised or operated by Chicken Guy or its affiliates to any competitor, by direct or indirect inducement or otherwise.
(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.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, a franchisee is restricted from diverting business from Chicken Guy restaurants for a period of one year following the expiration or termination of the franchise agreement. Specifically, the franchisee cannot directly or indirectly attempt to divert any business or customers from any restaurant franchised or operated by Chicken Guy or its affiliates to any competitor. This restriction applies to any effort to entice customers away, whether directly or indirectly.
In addition to not diverting customers, for one year after the agreement ends, the franchisee also cannot own, operate, or have any interest in a restaurant business that features chicken as a primary menu item (at least 20% of sales) or whose operation or trade dress is similar to the Chicken Guy system. This prevents a former franchisee from immediately opening a competing chicken restaurant and leveraging the knowledge and experience gained from the Chicken Guy franchise.
These restrictions are designed to protect Chicken Guy's trade secrets, training, and confidential information, as well as the substantial investments the company has made in developing its system. The FDD states that Chicken Guy would be unable to adequately protect its system if franchisees were permitted to hold interests in competitive businesses. The agreement emphasizes that these restrictions will not hinder the franchisee's activities, suggesting that the franchisee can pursue other business ventures outside of direct competition with Chicken Guy.