How does Churchs Holding's Supply Chain Department benefit franchisees?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
m we have given (and not revoked) our written approval.
Church's Holding's Supply Chain Department provides purchasing and logistical services to the System. You must participate in Church's Holding's Supply Chain Department (or any successor we designate) and sign a Participation Memorandum regarding your participation substantially in the form attached as Exhibit U. The Supply Chain Department negotiates with certain vendors and suppliers for the benefit of franchisees as well as company-owned stores. The Supply Chain Department passes its costs and overhead to the System through surcharges on certain products, as detailed in Item 6. Currently, these surcharges are: $1.22 per case of flour (breading), $3.57 per case of regular chicken boxes, $3.57 per case of family chicken boxes, $1.10 per case of frying oil, and $4.71 per case of biscuit mix. The surcharges are
imposed by the suppliers of these products and then paid to the Supply Chain Department. The Supply Chain Department has a Board of Directors with 7 members. The Church's Independent Franchise Association appoints 3 members of the Board, the 2 largest franchisees (determined by annual revenue) appoint 2 members of the Board, and we appoint the remaining 2 members of the Board. The budget of the Supply Chain Department, including the surcharges on certain products, is subject to the appro
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 31–34)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, the Supply Chain Department within Churchs Holding provides purchasing and logistical services to the franchise system, aiming to benefit both franchisees and company-owned stores. Franchisees are required to participate in this department and sign a Participation Memorandum. The primary benefit is that the Supply Chain Department negotiates with vendors and suppliers to secure potentially better deals on essential products.
However, this service is not without cost. The Supply Chain Department passes its operational costs and overhead to the franchise system through surcharges on certain products. As of the FDD date, these surcharges include $1.22 per case of flour (breading), $3.57 per case of regular chicken boxes, $3.57 per case of family chicken boxes, $1.10 per case of frying oil, and $4.71 per case of biscuit mix. These surcharges are initially imposed by the suppliers and then remitted to the Supply Chain Department.
The Supply Chain Department's budget, including these surcharges, is subject to the approval of its Board of Directors. The board consists of seven members, with representation from franchisees: three members are appointed by the Church's Independent Franchise Association, two by the two largest franchisees (based on annual revenue), and two by Churchs Chicken itself. This structure provides franchisees with some level of oversight and input into the department's operations and financial decisions.
While the Supply Chain Department aims to leverage collective buying power, franchisees should carefully evaluate whether the negotiated benefits outweigh the costs of the surcharges. The franchisee also needs to consider that they are obligated to participate in the Supply Chain Department. Prospective franchisees should inquire about the specific criteria used to select vendors, the frequency of vendor negotiations, and the process for ensuring that the surcharges remain competitive and justified.