Where is involvement in Competitive Activities restricted after the termination or expiration of an Hck Hot Chicken Area Development Agreement?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Area 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, after the termination or expiration of the Area Development Agreement, franchisees are restricted from involvement in Competitive Activities for a period of 2 years. This restriction applies within the Development Area, unless Hck Hot Chicken provides express written consent to waive this restriction.
Competitive Activities are defined as owning, operating, lending to, advising, being employed by, or having any financial interest in (i) any restaurant that derives 20% or more of its Gross Sales from the sale of fried chicken, other than a Restaurant operated pursuant to a validly subsisting Franchise Agreement with Franchisor, or (ii) any business that specializes in developing, operating or franchising restaurants that derives 20% or more of its Gross Sales 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.
However, the FDD states that Competitive Activities do 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. This exception allows franchisees to hold minor, passive investments in publicly traded companies, even if those companies are involved in competitive activities.