What is the scope of the right granted to an Hck Hot Chicken franchisee to operate a restaurant?
Hck_Hot_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
2.3.1 If "No Territorial Rights" is selected in Attachment A, the franchise and license and other rights granted in this Agreement are for the Location only at the specific numbered street address at which the Franchised Restaurant shall be physically located and Franchisee acknowledges the franchise and license granted to Franchisee under this Agreement is nonexclusive and it has no territorial protection under this Agreement.
If an area is selected and described in Attachment A, then during the Term, neither Franchisor nor any Affiliate of Franchisor shall open or operate any Traditional Restaurant, nor license others to do so, within the geographic area described on Attachment A (the "Territory").
2.3.2 Except to the limited extent expressly provided in Section 2.3 of this Agreement, the license granted to the Franchisee under this Agreement is nonexclusive and Franchisor expressly reserves all other rights including, the exclusive, unrestricted right, in its discretion, directly and indirectly, itself and through its employees, Affiliates, representatives, franchisees, licensees, assigns, agents and others:
(a) to own or operate, and to license others (which may include its Affiliates) to own or operate:
(i) "HCK Hot Chicken" Restaurants at any location outside the Territory, and regardless of proximity to Franchisee's Restaurant, even if doing so will or might affect Franchisee's Restaurant;
(ii) Non-Traditional Restaurants at any location, and of any type whatsoever, within or outside the Territory, and regardless of proximity to Franchisee's Restaurant, even if doing so will or might affect Franchisee's Restaurant; provided that Franchisee shall be given a right of first refusal for any Non-Traditional Restaurant in a shopping center which is over 500,000 square feet in size located within Franchisee's Territory (Franchisee shall have seven days following Franchisor's notice to execute Franchisor's then-current form of franchise agreement and all ancillary documents and pay Franchisor's then-current initial franchise fee); and
(iii) Restaurants or other businesses operating under names other than "HCK Hot Chicken", at any location, and of any type whatsoever, within or outside the Territory and regardless of their proximity to Franchisee's Restaurant;
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 54)
What This Means (2025 FDD)
According to Hck Hot Chicken's 2025 Franchise Disclosure Document, the scope of a franchisee's rights depends on what is specified in Attachment A of the franchise agreement. If "No Territorial Rights" is selected, the franchisee's rights are limited to the specific street address of their restaurant location, and the franchise is nonexclusive, offering no territorial protection. This means Hck Hot Chicken can open other locations nearby.
However, if a geographic area is described in Attachment A, the franchisee is granted a defined territory. Within this Territory, Hck Hot Chicken agrees not to open or operate any Traditional Restaurants, nor license others to do so, during the term of the agreement. This provides the franchisee with a degree of territorial exclusivity, protecting them from direct competition from other Hck Hot Chicken Traditional Restaurants within their Territory.
Even with a defined territory, Hck Hot Chicken retains significant rights. They can operate or license others to operate Hck Hot Chicken Restaurants outside the Territory, regardless of proximity to the franchisee's location. They can also operate Non-Traditional Restaurants (of any type) within or outside the Territory, even if it impacts the franchisee's business. The franchisee has a right of first refusal for any Non-Traditional Restaurant in a shopping center over 500,000 square feet within their Territory, giving them seven days to execute a franchise agreement and pay the initial franchise fee. Furthermore, Hck Hot Chicken can operate other businesses under different names, regardless of location or proximity to the franchisee's restaurant. These stipulations mean that while a franchisee may have some territorial protection, Hck Hot Chicken retains considerable freedom to operate and license other businesses that could potentially compete.