Can Chicken Guy refuse to renew a franchise on terms not generally available to other franchisees?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 17: RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION]
| PROVISION | SECTION IN FRANCHISE AGREEMENT | SUMMARY |
|---|---|---|
| a. Length of the | Section 2 | Ten years from the date that the Franchised Restaurant |
| franchise term | opens. | |
| b. Renewal or extension of the term | Section 2.B. and NT Location Addendum Section 3 | You can renew for one renewal term of ten years. If you sign a Nontraditional Location Addendum to the Franchise Agreement, you can renew for two five-year renewal terms. |
| PROVISION | SECTION IN FRANCHISE AGREEMENT | SUMMARY |
| q. Non-competition covenants during the term of the franchise | Section 21.C. | No diversion of any business or customer to any competitor; no interest in any restaurant business that that features chicken as a primary menu item (i.e., sales of chicken menu items comprise at least 20% of sales) or whose method of operation or trade dress is similar to that used in the System (subject to state law). |
| r. Non-competition covenants after the franchise is terminated or expires | Section 21.C. | No activity as described in q. above for one year within the Protected Area and within two miles of any then-existing Chicken Guy! Restaurant. If you violate the post-termination non-competition provisions, you must pay liquidated damages equal to our then-current Initial Franchise Fee and 8% of the Gross Sales of the competing business until the expiration of the non- competition period (subject to state law). |
| s. Modification of the | Section 29 | No modification generally without signed agreement, |
| agreement | but we may modify the System and the Manual. | |
| t. Integration/merger clause | Section 29 | Only the terms of the Franchise Agreement are binding (subject to state law). Any representations or promises made outside the disclosure document and the Franchise Agreement may not be enforceable. |
| u. Dispute resolution by arbitration or mediation | Sections 31.A & B. | Subject to state law, either party will submit any claim, controversy, or dispute arising out of the agreement to non-binding mediation and, thereafter, to arbitration. The mediation and arbitration will take place in the city where our principal offices are located at the time the demand for mediation or arbitration is filed, which is currently Orlando, Florida. |
| v. Choice of forum | Section 31.D. | Subject to state law and subject to the mediation and arbitration requirement, any actions for injunctive relief must be filed in the jurisdiction where our principal offices are located at the time suit is filed, which is currently Orlando, Florida while simultaneously submitting the matter to mediation and then arbitration. |
| w. Choice of law | Section 31.C. | Subject to state law, Florida law applies. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 40–46)
What This Means (2025 FDD)
Based on the 2025 Chicken Guy Franchise Disclosure Document, the document includes information regarding renewal, termination, transfer, and dispute resolution. However, it does not explicitly state whether Chicken Guy can refuse to renew a franchise on terms not generally available to other franchisees. The document does outline general provisions for renewal and termination, but it does not address the specific scenario of offering non-standard renewal terms.
Item 17 provides details on the length of the franchise term, conditions for renewal, and grounds for termination, as well as non-competition covenants and dispute resolution mechanisms. These sections describe the standard procedures and conditions that apply to all franchisees. However, the FDD does not clarify whether the franchisor has the discretion to offer different renewal terms to individual franchisees.
A prospective franchisee should seek clarification from Chicken Guy regarding their policy on renewal terms. Specifically, they should inquire whether there are any circumstances under which the franchisor might offer different renewal terms to some franchisees but not others. Understanding this aspect is crucial for assessing the long-term prospects and fairness of the franchise agreement.