What is considered a 'Competitive Activity' that is restricted by Hck Hot Chicken after termination or expiration of the franchise?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Development Agreement | Summary from the sale of fried chicken, or (iii) any business engaged in the |
|---|---|---|
| preparation, production or sale, at wholesale, of any fried chicken food product. Notwithstanding the foregoing, Competitive Activities shall not include the direct or indirect ownership solely as an investment, of securities of any entity which are traded on any national securities exchange if the owner thereof (i) is not a controlling person of, or a member of a group which controls, such entity and (ii) does not, directly or indirectly, own 5% or more of any class of securities of such entity. | ||
| r. Non-competition covenants after the franchise is terminated or expires | Section 8.2 | Except with our express written consent, no involvement in any Competitive Activities, as defined above, for 2years within the Development Area. |
Source: Item 17 — RENEWAL, TERMINATIONS, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, a 'Competitive Activity' that is restricted after the termination or expiration of the franchise includes involvement in any business that involves the sale of fried chicken, or any business engaged in the preparation, production, or sale, at wholesale, of any fried chicken food product.
However, the FDD specifies an exception to these restrictions. The ownership of securities of any entity traded on a national securities exchange is not considered a Competitive Activity if the owner is not a controlling person of the entity, or part of a group that controls it, and does not directly or indirectly own 5% or more of any class of the entity's securities.
This non-compete agreement is in effect for 2 years within the Development Area, unless Hck Hot Chicken provides express written consent to waive this restriction. This means that after a franchise agreement ends, a former franchisee is significantly limited in their ability to engage in any fried chicken business within their former territory.