What is the geographic scope of the non-competition covenant for Hck Hot Chicken after the franchise is terminated or expires?
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. |
| s. Modification of the | Section 8.3 | The Area Development Agreement may be modified only by |
| agreement | written agreement between the parties. | |
| t. Integration/merger clause | Section 11.9 | Only the terms of the Area Development Agreement are binding (subject to applicable state law). Any representations or promises outside of this Franchise Disclosure Document and Area Development Agreement may not be enforceable. |
| u. |
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, if the franchise is terminated or expires, the franchisee is restricted from involvement in any Competitive Activities for two years within the Development Area. Competitive Activities include 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: owning securities of an entity traded on a national securities exchange is permitted if the owner is not a controlling person and owns less than 5% of any class of securities.
This non-compete clause prevents a former Hck Hot Chicken franchisee from directly competing with the franchise within their previously assigned Development Area for a period of two years after the franchise agreement ends. This restriction aims to protect Hck Hot Chicken's market share and brand recognition within that area. Franchisees should carefully consider the implications of this clause, especially if they plan to remain in the same geographic area and operate a similar business after their franchise agreement concludes.