For how long after the Chicken Guy Franchise Agreement expires or terminates is the franchisee restricted from selling, assigning, leasing, or transferring the Franchised Location?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (5) Franchisee further covenants and agrees that, for a period of 1 year following the expiration or earlier termination of this Agreement, Franchisee will not, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with any person, firm, partnership, corporation, or other entity, sell, assign, lease or transfer the Franchised Location to any person, firm, partnership, corporation, or other entity which Franchisee knows, or has reason to know, intends to operate a restaurant business at the Franchised Location that would violate Sections 21.C.(2)(c) or 21.C.(3).
Franchisee, by the terms of any conveyance selling, assigning, leasing or transferring its interest in the Franchised Location, shall include these restrictive covenants as are necessary to ensure that a restaurant business that would violate Sections 21.C.(2)(c) or 21.C.(3) is not operated at the Franchised Location for this 1 year period, and Franchisee shall take all steps necessary to ensure that these restrictive covenants become a matter of public record.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to the 2025 Chicken Guy Franchise Disclosure Document, a franchisee is restricted from selling, assigning, leasing, or transferring their franchised location for a period of one year following the expiration or termination of the Franchise Agreement. This restriction applies to any person or entity the franchisee knows, or has reason to know, intends to operate a restaurant business at the franchised location that would violate specific sections of the agreement related to restricted businesses.
This means that upon exiting the Chicken Guy system, a franchisee cannot simply hand over their location to a competitor or someone planning to run a similar business that would infringe on Chicken Guy's interests. This measure is in place to protect Chicken Guy's brand and market position by preventing the immediate establishment of a competing restaurant at the same location.
To ensure compliance, the franchisee must include restrictive covenants in any conveyance documents when selling, assigning, leasing, or transferring their interest in the franchised location. These covenants must be designed to prevent a violating restaurant business from operating at the location during the one-year period. Furthermore, the franchisee is responsible for taking all necessary steps to make these restrictive covenants a matter of public record, ensuring they are legally binding and enforceable.