During the Development Agreement, can a Churchs Chicken developer own a restaurant business that specializes in selling fried chicken?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Development Agreement | Summary |
|---|---|---|
| q. Non-Competition Covenants During the Term of the Development Agreement | §14 | In-term, non-competition covenants include a ban on diverting any customer or potential customer; owning any restaurant business that specializes in selling fried chicken (which restriction does not apply to your existing Restaurants, if any, or to other restaurants you operate that are franchised by us or our affiliates). With respect to individual owners, the same covenant is contained in § 4 of the Guaranty Agreement. |
| r. Non-Competition Covenants After the Development Agreement is Terminated or Expires | §14 | Post-term, non-competition covenants include a 2-year ban on owning any restaurant business that specializes in selling fried chicken within the Development Area or within a 5-mile radius of any Restaurant that is then in existence (which restriction does not apply to your existing Restaurants, if any, or to other restaurants you operate that are franchised by us or our affiliates). With respect to individual owners, the same covenant is contained in § 4 of the Guaranty Agreement. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 50–55)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, during the term of the Development Agreement, a franchisee is restricted from owning any restaurant business that specializes in selling fried chicken. However, this restriction does not apply to the franchisee's existing restaurants, if any, or to other restaurants they operate that are franchised by Churchs Chicken or its affiliates. This non-competition covenant is also included in the Guaranty Agreement for individual owners.
This means that while under the Development Agreement, a Churchs Chicken developer cannot independently own and operate a competing fried chicken restaurant, they can continue to operate any existing restaurants they had before entering the agreement. They are also allowed to operate other restaurant franchises offered by Churchs Chicken or its affiliates.
After the Development Agreement is terminated or expires, a similar non-competition covenant applies for a period of two years. During this time, the franchisee is banned from owning any restaurant business that specializes in selling fried chicken within the Development Area or within a 5-mile radius of any existing Churchs Chicken restaurant. This post-term restriction also does not apply to the franchisee's existing restaurants or other Churchs Chicken franchises they operate.