After termination or expiration of the Development Agreement, can a Chicken Guy developer complete and open a Franchised Restaurant if a Franchise Agreement has been fully executed?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) Developer shall have no further right to develop or open Franchised Restaurants in the Development Territory, except that Developer shall be entitled to complete and open a Franchised Restaurant for which a Franchise Agreement has been fully executed. Termination or expiration of this Agreement shall not affect Developer's right to continue to operate Franchised Restaurants that were open and operating as of the date this Agreement terminated or expired.
- (2) The limited exclusive rights granted Developer in the Development Territory shall terminate, and Chicken Guy shall have the right to operate or license others to operate restaurants identified in whole or in part by the name and mark "CHICKEN GUY!" anywhere in the Development Territory.
Source: Item 23 — RECEIPTS (FDD pages 50–286)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, a developer is entitled to complete and open a franchised restaurant even after the termination or expiration of the Development Agreement, provided that a Franchise Agreement for that specific restaurant has already been fully executed. This allowance does not extend the developer's right to open additional locations beyond those already under a fully executed Franchise Agreement.
However, the termination or expiration of the Development Agreement means the developer loses the exclusive rights to the Development Territory. Chicken Guy retains the right to operate or license others to operate restaurants within that territory using the "CHICKEN GUY!" name and mark. This means that while a developer can finish a restaurant already in progress under a Franchise Agreement, they cannot expand further in the territory and may face competition from new Chicken Guy locations.
This provision protects developers who have already invested in a location and secured a Franchise Agreement, allowing them to realize their investment. However, it also allows Chicken Guy to regain control over the development territory and pursue further expansion without being restricted by the former developer's rights. Prospective developers should carefully consider the implications of this clause, especially regarding their long-term expansion plans and potential competition within the territory after the Development Agreement ends.