Upon termination or expiration of the Chicken Guy franchise agreement, what happens to the limited exclusive rights granted to the franchisee in the Protected Area?

According to the 2025 Chicken Guy Franchise Disclosure Document, upon termination or expiration of the franchise agreement, the limited exclusive rights granted to the franchisee in the Protected Area immediately terminate. Chicken Guy then has the right to operate, or license others to operate, Chicken Guy restaurants anywhere in the Protected Area. This means that after the agreement ends, the franchisee no longer has any exclusive rights to the territory and Chicken Guy can establish other locations, even in the immediate vicinity of the former franchise.

This is a significant consideration for potential franchisees. While the franchise agreement is in effect, the franchisee benefits from a Protected Area where Chicken Guy will not directly compete. However, this protection disappears upon termination or expiration of the agreement. This could impact the resale value of the franchise or the franchisee's ability to continue operating a similar business in the same area after the franchise term ends.

It is important for prospective franchisees to understand the implications of this clause. They should carefully consider the potential for competition from Chicken Guy or other franchisees after the agreement ends, and factor this into their business planning. Additionally, franchisees should be aware of any restrictions on operating a similar business in the area after the franchise agreement terminates, as outlined in Section 21 of the franchise agreement.