After termination or expiration of the Development Agreement, does Chicken Guy have the right to operate or license others to operate restaurants using the "CHICKEN GUY!" name and mark within the Development Territory?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
14. OBLIGATIONS ON TERMINATION OR EXPIRATION
A. Developer's Obligations. Upon termination or expiration of this Agreement:
- (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, upon termination or expiration of the Development Agreement, Chicken Guy has the right to operate or license others to operate restaurants using the "CHICKEN GUY!" name and mark anywhere in the Development Territory. However, the developer can complete and open a franchised restaurant if the Franchise Agreement has been fully executed before the termination or expiration date. The termination or expiration of the Development Agreement does not affect the developer's right to continue operating franchised restaurants that were open and operating as of the termination or expiration date.
This means that even if the Development Agreement ends, Chicken Guy is not restricted from establishing its own restaurants or allowing other franchisees to operate within the territory that was previously assigned to the developer. This clause protects Chicken Guy's ability to expand its brand presence and market coverage, regardless of the status of the Development Agreement.
For a prospective developer, this highlights the importance of fulfilling the development schedule and maintaining a good relationship with Chicken Guy. Failure to do so could result in termination of the agreement and loss of exclusive development rights, allowing Chicken Guy to directly compete or introduce other franchisees into the territory. Developers should carefully consider the implications of this clause and ensure they have the resources and commitment to meet the development obligations outlined in the agreement.