Can Chicken Guy operate restaurants at Nontraditional Locations within the Protected Area?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
If you sign a Development Agreement, you will receive a Development Territory, which will be mutually agreed upon by us and you, taking into consideration the density of the area and the number of Franchised Restaurants you agree to develop. A description of the Development Territory will be included in the Development Agreement. The perimeters of the Development Territory may be described by specific street boundaries, county lines, state lines, municipal boundaries, railroad tracks or other similar boundary descriptions, and the size may range from a portion of a metropolitan area to a county or a state in less densely populated areas. For each Chicken Guy! Restaurant you will develop under the Development Agreement, you must select a site which we approve, based on our then-current site selection criteria we establish from time to time.
The System (including the products sold under the Proprietary Marks) has been developed, and is designed, to function effectively in a wide variety of retail environments, many of which are not practically available to you. Accordingly, under the Development Agreement, we reserve to ourselves the right to: (1) operate, and license others to operate, restaurants identified in whole or in part by the name and mark "Chicken Guy!" in the Development Territory at Nontraditional Locations; (2) award national or regional licenses to third parties to sell products under the name and mark "Chicken Guy!" in foodservice facilities primarily identified by the third party's trademark; (3) develop and operate, and license others to develop and operate, restaurants other than restaurants identified in whole or in part by the name and mark "Chicken Guy!" in the Development Territory; (4) merchandise and distribute products identified by some or all of the Proprietary Marks in the Development Territory through any other method or channel of distribution; and (5) sell and distribute products identified by some or all of the Proprietary Marks in the Development Territory to restaurants other than restaurants identified in whole or in part by the name and mark "Chicken Guy!," provided those restaurants are not licensed to use the Proprietary Marks in connection with their retail sales.
Source: Item 12 — TERRITORY (FDD pages 34–36)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, whether Chicken Guy can operate restaurants at Nontraditional Locations within a franchisee's protected area depends on whether the franchisee signs a Development Agreement or a Franchise Agreement. If a franchisee signs a Development Agreement, Chicken Guy reserves the right to operate, and license others to operate, restaurants identified in whole or in part by the name and mark "Chicken Guy!" in the Development Territory at Nontraditional Locations.
If a franchisee signs a Franchise Agreement without a Development Agreement, the FDD states that Chicken Guy and its affiliates may operate, and license others to operate, restaurants identified in whole or in part by the name and mark "Chicken Guy!" and/or utilizing the System in the Protected Area at Nontraditional Locations. This means that even with a protected area, Chicken Guy retains the right to establish restaurants in nontraditional locations within that area.
This is a significant consideration for potential franchisees. While a protected area typically offers some exclusivity, Chicken Guy explicitly retains the right to operate in nontraditional locations, which could include venues like airports, stadiums, or food courts. This could lead to direct competition within the franchisee's protected area, potentially impacting their revenue. Franchisees should carefully evaluate the potential impact of these nontraditional locations on their investment and discuss this with Chicken Guy during their due diligence.
Furthermore, if a franchisee signs a Nontraditional Location Addendum to the Franchise Agreement, they will not receive any exclusive territory. This means they may face competition from other franchisees, outlets that Chicken Guy owns, or other channels of distribution or competitive brands that Chicken Guy controls.