Why are certain provisions of the standard Churchs Chicken Franchise Agreement modified when operating a co-branded restaurant?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
RECITALS:
- A. Cajun and Franchisee have entered into the Franchise Agreement, pursuant to which Franchisee is authorized to operate the Franchised Restaurant at the Franchised Location. Since the Franchised Restaurant will be operated in connection with the operation of a co-branded restaurant (the "Co-Branded Business"), certain provisions of the Franchise Agreement will not be applicable to the Franchised Restaurant and its operation, and certain other provisions need to be added to the Franchise Agreement to govern the Franchised Restaurant and its operation.
- B. In light of the proximity of the Co-Branded Business to the Franchised Restaurant, Cajun and Franchisee are entering into this Amendment to modify the Franchise Agreement as set forth in this Amendment.
NOW THEREFORE, in consideration of the mutual covenants, agreements and obligations set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree to amend the Franchise Agreement as follows:
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- The following new Subsection 1.A.(3) is added to the end of Section 1.A.:
- (3) The Franchised Restaurant is part of a larger site ("Facility") at the street address specified in attached Appendix A.
In addition to the Franchised Restaurant, Franchisee and/or its affiliates operate the Co-Branded Businesses at the Facility identified in Appendix A.
- The following sentence is added to the end of Section 3.D.:
Gross Sales shall also not include: (1) any revenue derived from any business operated by Franchisee at the Facility other than the Franchised Restaurant, or (2) beverages sold at the Facility in containers not bearing the Proprietary Marks (beverages sold in containers bearing the Proprietary Marks shall be included in Gross Sales).
- The following sentence is added to the end of Section 3.F.(2):
Franchisee must maintain a separate bank account for the Restaurant from that of any Co-Branded Business that Franchisee owns or operates on or about the Franchised Location. All Gross Sales from the Restaurant must be deposited into this bank account. The revenues from the Co-Branded Business shall not be co-mingled with the Gross Revenues from the Restaurant.
Source: Item 22 — CONTRACTS (FDD pages 67–68)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, when a Churchs Chicken franchise is operated as a co-branded restaurant, certain provisions of the standard franchise agreement are modified to address the unique operational and financial aspects of running two businesses at the same location. These modifications are formalized through an amendment to the standard franchise agreement.
The modifications ensure that Churchs Chicken can maintain oversight and protect its brand standards within the co-branded environment. For example, Cajun, the franchisor, retains approval rights over all Churchs Chicken signage at the facility, ensuring it is at least equal in size to the signage of the other business and consistent with the Churchs Chicken brand image. Additionally, Cajun is permitted to inspect the co-branded business to ensure it is well-maintained and not using Cajun's proprietary marks or products without authorization.
Financially, the amendment requires franchisees to accurately segregate sales data between the Churchs Chicken restaurant and the co-branded business. This segregation ensures accurate royalty calculations and financial reporting. Franchisees must use computer systems capable of providing this segregated data to Cajun in a specified format. Furthermore, franchisees are required to maintain separate bank accounts for the Churchs Chicken restaurant and the co-branded business, preventing the commingling of revenues. These modifications to the Churchs Chicken franchise agreement are designed to address the specific challenges and considerations that arise when operating a co-branded restaurant, ensuring both the success of the Churchs Chicken franchise and the protection of the brand's interests.