What rights does Chicken Guy reserve regarding operating restaurants in the Development Territory at Nontraditional Locations?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
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, if a franchisee signs a Development Agreement, Chicken Guy retains specific rights regarding restaurant operations within the Development Territory, especially at Nontraditional Locations. Chicken Guy reserves the right to operate, and license others to operate, Chicken Guy restaurants in the Development Territory at Nontraditional Locations. This means that even within a franchisee's designated territory, Chicken Guy can establish or authorize other Chicken Guy locations in venues considered 'nontraditional,' which could include locations like airports, universities, or food courts.
In addition to operating at Nontraditional Locations, Chicken Guy also reserves the right to award national or regional licenses to third parties to sell products under the Chicken Guy name in foodservice facilities primarily identified by the third party's trademark. Chicken Guy can also develop and operate, and license others to do the same, restaurants other than Chicken Guy restaurants within the Development Territory. Furthermore, Chicken Guy retains the right to merchandise and distribute products identified by the Proprietary Marks in the Development Territory through any other method or channel of distribution. Chicken Guy can also sell and distribute products identified by the Proprietary Marks in the Development Territory to restaurants other than Chicken Guy, provided those restaurants are not licensed to use the Proprietary Marks in connection with their retail sales.
These reservations mean that a Chicken Guy franchisee's Development Territory is not entirely exclusive. Chicken Guy retains considerable freedom to operate and license others within that territory through various channels and locations. A prospective franchisee should carefully consider the potential impact of these reserved rights on their business, as they could face competition from Chicken Guy itself or from other entities authorized by Chicken Guy within their Development Territory. Understanding the definition of 'Nontraditional Locations' and the scope of other distribution channels is crucial for assessing the potential market and competition within the Development Territory.