Does a Casualty relieve the Churchs Chicken Sublessee of their obligation to pay rent under the sublease?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
No Casualty shall relieve Sublessee of any of its obligations under this Sublease or the other lease documents, including its obligations to make the regularly scheduled payments of Rent under this Sublease.
- (c) Restoration Obligation.
Promptly following the occurrence of a Casualty, Sublessee shall, at Sublessee's expense, commence and diligently complete the repair, restoration, replacement, and rebuilding of the Premises as nearly as possible to its value, condition and character immediately prior to the Casualty (a "Restoration").
Sublessee shall not be excused from repairing or maintaining the Premises or from Sublessee's Restoration obligation, regardless of whether there are Insurance Proceeds (as defined below) available to Sublessee or whether any such Insurance Proceeds are sufficient in amount, and the application or release by Sublessor of any Insurance Proceeds shall not cure or waive any default or notice of default under this Sublease or the other lease documents or invalidate any act done pursuant to such default or notice of default.
- (d) Termination of Lease.
Notwithstanding the foregoing, if the building comprising the Premises is damaged or destroyed during the last lease year of the then Term, including any Extension Period, and the cost of restoring such damage or destruction exceeds fifty percent (50%) of the then replacement value of the building, fixtures and improvements comprising the Premises, as reasonably determined by Sublessor, exclusive of the cost of the foundation, and an Event of Default shall not have occurred and be continuing, then Sublessee shall have the right to terminate this Sublease by giving notice of such termination ("Termination Notice") to Sublessor within thirty (30) days after the occurrence of such Casualty, in which event this Lease shall be deemed terminated effective as of the later of the date (i) such Termination Notice is delivered to Sublessor, (ii) Sublessee vacates the Premises following such
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, a casualty event does not relieve the sublessee of their obligation to pay rent. The sublessee is still required to make regularly scheduled rent payments, even if a casualty occurs.
The Churchs Chicken sublessee is responsible for the repair, restoration, replacement, and rebuilding of the premises after a casualty, at their own expense. This obligation exists regardless of whether insurance proceeds are available or sufficient to cover the costs. The application or release of insurance proceeds by the sublessor does not waive any default or notice of default under the sublease.
However, there is an exception: if the building is damaged or destroyed during the last lease year (including any extension period) and the cost of restoration exceeds 50% of the replacement value, the sublessee has the right to terminate the sublease by providing notice within 30 days of the casualty. In this case, rent and other charges will be adjusted and paid up to the termination date. This termination does not relieve the sublessee of obligations arising before the termination date or those that survive termination according to the sublease terms.