Under the Chicken Guy Development Agreement, what is the prohibited action for Chicken Guy regarding operating or licensing restaurants within the Development Territory?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
Except as described in the preceding paragraph, we will not, during the term of the Development Agreement (which expires on the date that you sign the lease for the last Franchised Restaurant that you are required to develop under the Development Schedule) operate, or license others to operate, restaurants identified in whole or in part by the name and mark "Chicken Guy!" in the Development Territory, provided you are in compliance with the terms of the Development Agreement and other agreements with us or our affiliates and you are current on all obligations due to us and our affiliates. This does not prohibit us or our affiliates from: (1) operating, and licensing others to operate, during the term of the Development Agreement, restaurants identified in whole or in part by the name and mark "Chicken Guy!" at any location outside of the Development Territory; (2) operating, and licensing others to operate, after the Development Agreement terminates or expires, restaurants identified in whole or in part by the name and mark "Chicken Guy!" at any location; and (3) operating, and licensing others to operate, at any location, during or after the
Development Term, any type of restaurant other than a restaurant identified in whole or in part by the name and mark "Chicken Guy!." The restrictions above apply only to Chicken Guy and do not apply to restaurants identified in whole or in part by the name and mark "Chicken Guy!" under construction or in operation in the Development Territory as of the date of the Development Agreement. We are not required to compensate you for exercising any rights reserved to us in the Development Territory.
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 is in compliance with the terms of the Development Agreement, Chicken Guy will not operate or license others to operate restaurants identified by the name and mark "Chicken Guy!" within the Development Territory during the term of the Development Agreement. The Development Agreement expires when the franchisee signs the lease for the last Franchised Restaurant that they are required to develop under the Development Schedule. This restriction is conditional, requiring the franchisee to be in compliance with all agreements and current on all obligations to Chicken Guy and its affiliates.
However, this restriction does not prohibit Chicken Guy or its affiliates from operating or licensing others to operate Chicken Guy restaurants outside the Development Territory during the term of the Development Agreement. After the Development Agreement terminates or expires, Chicken Guy can operate or license others to operate Chicken Guy restaurants at any location. Chicken Guy also retains the right to operate or license others to operate any type of restaurant other than a Chicken Guy restaurant at any location during or after the Development Term.
It is important to note that the restrictions apply only to Chicken Guy and do not affect restaurants identified as "Chicken Guy!" already under construction or in operation within the Development Territory as of the Development Agreement date. Chicken Guy is also not obligated to compensate the franchisee for exercising any rights reserved to them within the Development Territory. Prospective franchisees should be aware that failure to comply with the Development Agreement, including the Development Schedule, may result in termination of the agreement and loss of territorial rights.