How does the Development Agreement mentioned in Item 5 relate to the franchisee's obligation to develop restaurants within a specific timeframe, considering the Development Schedule Extension Fee in Item 6 for Churchs Chicken?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
the Development Area that are the same as, similar to or compete with Church's Restaurants in that they have a substantially similar menu or similar theme or concept; (e) merchandise and distribute products identified by some or all of the Proprietary Marks in the Development Area through any method or channel of distribution other than restaurants; (f) sell and distribute productsidentified by some or all of the Proprietary Marksin the Development Area to restaurants other than restaurants identified in whole or in part by the names and marks "Church's", "Church's Chicken" and "Church's Texas Chicken" provided those restaurants are not licensed to use the Proprietary Marks or the System in connection with their retail sales, and (g) sell and license others to sell products identified by some or all of the Proprietary Marks in the Development Area through temporary facilities in connection with any cultural, sporting, recreational, or other temporary event. Cajun reserves to itself all rights to use and license the System and Proprietary Marks other than those expressly granted under this Agreement.
- (2) Cajun may operate or license others to operate restaurants identified in whole or in part by the names and marks "Church's", "Church's Chicken" and "Church's Texas Chicken" in the Development Area.
- (3) Nothing in this Agreement shall prohibit Cajun or its affiliates from operating or licensing a restaurant at any location in or outside the Development Area.
3. DEVELOPMENT SCHEDULE
- A. During the Development Term, Developer shall develop and open in the Development Area the number of Franchised Restaurants specified in the Development Schedule in Schedule 2. For each Franchised Restaurant to be developed during the Development Term, Developer must first obtain Cajun's acceptance of the site by the site acceptance date listed in the Development Schedule in Schedule 2. Developer's strict compliance with the Development Schedule is essential to this Agreement. If Developer fails to fulfill its obligations to develop and open any Franchised Restaurant when required by the Development Schedule or to obtain site acceptance by the date specified in the Development Schedule, such failure shall constitute a non-curable breach of this Agreement permitting Cajun immediately to terminate this Agreement by giving notice of termination to Developer. Time is of the essence.
- B. In addition to the Development Fee required by Section 4, Developer shall pay Cajun an initial franchise fee ("Initial Franchise Fee") for each Franchised Restaurant to be developed under this Agreement in the amount set forth in Schedule 2. The Initial Franchise Fee is payable upon execution of the Franchise Agreement for each Franchised Restaurant. Developer acknowledges and agrees that the Initial Franchise Fee is fully earned by Cajun when paid, and it is not refundable.
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, the Development Agreement grants the developer the right to develop franchised restaurants within a specific geographic area, known as the Development Area, during a set Development Term. This term begins on the effective date of the agreement and ends when the last restaurant is required to open, as specified in the Development Schedule. The Development Agreement itself does not grant the right to operate a Churchs Chicken restaurant but provides the opportunity to enter into franchise agreements for locations within the Development Area that are accepted by Churchs Chicken.
The Development Schedule, outlined in Schedule 2 of the Development Agreement, specifies the number of Churchs Chicken restaurants the developer must open within the Development Area during the Development Term. For each restaurant, the developer must have the site accepted by Churchs Chicken by the date listed in the Development Schedule. Strict compliance with the Development Schedule is critical, and failure to meet the deadlines for development, opening, or site acceptance constitutes a non-curable breach of the agreement, potentially leading to immediate termination by Churchs Chicken.
Churchs Chicken may, at its discretion, grant extensions to the Development Schedule, known as Development Schedule Extensions. For each extension, the developer must pay a Development Schedule Extension Fee, which cannot exceed $5,000 for extensions of five months or less. However, Churchs Chicken reserves the right to deny any extension request for any reason. If the extension applies to the opening date and the restaurant opens during the extension period, the extension fee will be credited toward the initial franchise fee for that restaurant. This fee structure incentivizes timely development while providing a mechanism for flexibility, albeit at a cost and subject to Churchs Chicken's approval.