What is the current status of the Texas Federal Action related to Churchs Chicken?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
nding Franchise Litigation of Cajun Global:*
Cajun Global, LLC, Cajun Operating Company, Cajun Realty, LLC, and Cajun Funding Corp. v. Royal Texas, LLC, Case No. 2022-17350 (Harris County, Texas District Court) (the "Texas State Action"). On March 21, 2022, we terminated the franchise agreements of Royal Texas, LLC ("Royal Texas"), a franchisee that operated 52 franchised restaurants in Houston, Texas for, among other things, operational defaults that we deemed to pose a threat or danger to public health and safety. On March 23, 2022, we and our affiliates filed the Texas Action against Royal Texas, asserting claims for breach of contract and to enforce the termination of the franchise agreements. We moved for an ex parte temporary restraining order, which the court granted on March 23, 2022. The court enjoined Royal Texas from operating the restaurants or using our Marks or System and requiring Royal Texas to turn over possession of the restaurants to us. We filed an Amended petition in the Texas Action adding David Davoudpour, BAH Texas, L.P., BAH Texas, LLC, BAH Texas Hospitality, Inc., Best American Hospitality Corp., Triangle Capital Properties, LLC ("Triangle"), all of whom are affiliates of Royal Texas. Triangle removed the action to Texas federal court (the "Texas Federal Action"). On removal, the Texas State Action was stayed. Several months after removal, the parties stipulated to stay the Texas Federal Action pending resolution of the Georgia Action. The Texas Federal Action currently remains stayed.
Royal Texas, LLC v. Cajun Global, LLC, Cajun Operating, LLC and High Bluff Capital Partners, LLC¸ Case No. 2022CV362893 (Fulton County, Georgia Superior Court) (the "Georgia Action"). On March 31, 2022, Royal Texas filed an action against us, our affiliate Cajun Operating, LLC, and our private equity ownership, High Bluff Capital Partners, LLC in Georgia (the "Georgia Action"). In the Georgia Action, Royal Texas asserted that we breached the parties' franchise agreements and the implied covenant of good faith and fair dealing by: (1) failing to offer Royal Texas renewal terms; (2) terminating the franchise agreements for allegedly pretextual reasons; and (3) allegedly failing to provide local marketing. Royal Texas also asserted claims for an accounting of Cajun Operating's Purchasing Group Fund, for business defamation, and for recovery of its attorneys' fees. The complaint did not make a demand for specific damages but alleges damages in excess of $50,000,000. We answered and filed counterclaims for breach of promissory note, statutory trademark infringement, statutory unfair competition, statutory
trademark or tradename infringement/unfair competition, common law unfair competition, civil theft, civil RICO, unjust enrichment, fraudulent inducement, fraudulent misrepresentation and concealment, and negligent misrepresentation.
Source: Item 3 — LITIGATION (FDD pages 14–16)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, the Texas Federal Action, initially a Texas State Action, was filed against Royal Texas, LLC, a franchisee operating 52 restaurants in Houston, due to operational defaults. The action was removed to Texas federal court by Triangle Capital Properties, LLC, an affiliate of Royal Texas. Currently, the Texas Federal Action remains stayed, pending the resolution of a separate Georgia Action. This means that the proceedings in the Texas Federal Action are temporarily suspended until the Georgia Action is resolved.
Additionally, Triangle Capital Properties, LLC filed a third-party complaint against Churchs Chicken's affiliates, Cajun Operating Company and Cajun Houston Holdings, LLC, in what is termed the "Second Texas Action." Triangle alleges that these affiliates tortiously interfered with Triangle's leases by influencing their landlord to default Triangle, allowing Churchs Chicken's affiliates to take possession of those locations. Churchs Chicken's affiliates have filed a motion to dismiss all claims. As of April 2025, a Magistrate Judge recommended that all claims against Churchs Chicken's affiliates be transferred to the stayed Texas Federal Action, and this recommendation is currently pending.
For a prospective franchisee, this ongoing litigation indicates potential risks and uncertainties associated with the Churchs Chicken franchise system, particularly concerning franchisee relationships and lease agreements. The fact that the Texas Federal Action is stayed pending the outcome of the Georgia Action suggests that the resolution of the dispute may take a considerable amount of time. The recommendation to transfer claims from the Second Texas Action into the stayed Texas Federal Action could further complicate and prolong the legal proceedings. It would be prudent for potential franchisees to closely monitor the outcomes of these legal proceedings and assess their potential impact on the stability and reputation of the Churchs Chicken franchise.