What is the required action for a Chicken Guy franchisee to develop a restaurant under the Development Agreement?
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.
Source: Item 12 — TERRITORY (FDD pages 34–36)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, if a franchisee signs a Development Agreement, they must select a site for each Chicken Guy restaurant they plan to develop. This site selection is subject to approval by Chicken Guy, based on the company's then-current site selection criteria. The Development Agreement will include a description of the Development Territory, which is determined by Chicken Guy and the franchisee, considering the area's density and the number of restaurants the franchisee commits to developing. The territory's boundaries may be defined by streets, county lines, state lines, municipal boundaries, railroad tracks, or similar markers. The size of the development territory can vary from a portion of a metropolitan area to a county or even a state in less populated regions.
This process means that a prospective Chicken Guy franchisee needs to work closely with the franchisor to identify and secure suitable locations within their designated territory. The franchisee cannot simply choose any site; it must meet Chicken Guy's criteria, which are subject to change over time. This requirement ensures that new locations align with the brand's overall strategy and standards.
It is important to note that Chicken Guy retains certain rights within the Development Territory, including the right to operate or license others to operate Chicken Guy restaurants at Nontraditional Locations, award licenses to third parties to sell Chicken Guy products in foodservice facilities identified by the third party's trademark, and develop or operate other types of restaurants. These reserved rights could potentially introduce competition within the franchisee's territory, so franchisees should carefully consider these factors when evaluating the opportunity.
Furthermore, the Development Agreement's term expires when the franchisee signs the lease for the last restaurant they are required to develop under the Development Schedule. Failure to comply with the Development Schedule or any other terms of the Development Agreement can result in termination of the agreement and loss of territorial rights. Therefore, franchisees must adhere to the agreed-upon development timeline and maintain compliance with all contractual obligations to maintain their rights within the Development Territory.