Can Chicken Guy operate or license others to operate Chicken Guy restaurants at any location after the Development Agreement terminates or expires?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as described in the preceding paragraph, we will not, during the term of the Development Agreement (which expires on the date that you sign the lease for the last Franchised Restaurant that you are required to develop under the Development Schedule) operate, or license others to operate, restaurants identified in whole or in part by the name and mark "Chicken Guy!" in the Development Territory, provided you are in compliance with the terms of the Development Agreement and other agreements with us or our affiliates and you are current on all obligations due to us and our affiliates. This does not prohibit us or our affiliates from: (1) operating, and licensing others to operate, during the term of the Development Agreement, restaurants identified in whole or in part by the name and mark "Chicken Guy!" at any location outside of the Development Territory; (2) operating, and licensing others to operate, after the Development Agreement terminates or expires, restaurants identified in whole or in part by the name and mark "Chicken Guy!" at any location; and (3) operating, and licensing others to operate, at any location, during or after the
Development Term, any type of restaurant other than a restaurant identified in whole or in part by the name and mark "Chicken Guy!." The restrictions above apply only to Chicken Guy and do not apply to restaurants identified in whole or in part by the name and mark "Chicken Guy!" under construction or in operation in the Development Territory as of the date of the Development Agreement. We are not required to compensate you for exercising any rights reserved to us in the Development Territory.
Source: Item 12 — TERRITORY (FDD pages 34–36)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, Chicken Guy has the right to operate or license others to operate Chicken Guy restaurants at any location once the Development Agreement expires or terminates. This means that even if a developer has a Development Agreement for a specific territory, Chicken Guy is not restricted from opening or franchising new locations anywhere after that agreement ends.
This clause is significant for potential developers as it clarifies that territorial protection is limited to the duration of the Development Agreement. After the agreement concludes, Chicken Guy can establish new franchises or company-owned stores, potentially in the same areas that the developer previously held rights to. This lack of long-term territorial exclusivity is a common practice in franchising, as franchisors typically want the flexibility to expand their brand as opportunities arise.
It is important to note that the Development Agreement expires when the developer signs the lease for the last franchised restaurant required under the Development Schedule. Therefore, the length of the Development Agreement is tied to the developer's ability to meet the development schedule. Prospective developers should carefully consider the development schedule and their ability to meet it, as this will directly impact the duration of their territorial protection. Chicken Guy is not required to compensate the developer for exercising any rights reserved to them in the Development Territory.
Furthermore, even during the term of the Development Agreement, Chicken Guy retains the right to operate or license others to operate Chicken Guy restaurants at any location outside of the Development Territory. This means that a developer's territorial protection is limited to the specific area outlined in the Development Agreement and does not extend to other regions. Chicken Guy also retains the right to operate other types of restaurants at any location, even during the Development Term.