How does the Development Agreement mentioned in Item 5 relate to the franchisee's site selection and acquisition/lease obligations in Item 9 for Churchs Chicken?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
| OBLIGATION | SECTION(S) IN AGREEMENT(S) | DISCLOSURE DOCUMENT ITEM |
|---|---|---|
| a. Site Selection and Acquisition/Lease | § 5 of Development Agreement | Item 11 |
A. Grant; Development Area. Cajun hereby grants to Developer, subject to the terms, conditions, provisions and limitations of this Agreement, the right to develop Franchised Restaurant(s) within the geographic area described in attached Schedule 1 ("Development Area") during the term of this Agreement ("Development Term"). The Development Term begins on the Effective Date and terminates on the date that the last Franchised Restaurant is required to be opened pursuant to the Development Schedule in attached Schedule 2. Developer has no right to renew or extend the Development Term. Developer shall locate each Franchised Restaurant in the Development Area at a specific location accepted by Cajun.
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. Development Rights Only. This Agreement is not a license or a franchise agreement. This Agreement does not give Developer the right to open or operate Church's Restaurants or use the System. This Agreement does not give Developer any right to license othersto open or operate Church's Restaurants or use the System. This Agreement only gives Developer the opportunity to enter into Church's Texas Chicken franchise agreements ("Franchise Agreements") for the operation of Franchised Restaurants at locations in the Development Area accepted by Cajun.
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, the Development Agreement significantly impacts a franchisee's site selection and acquisition/lease obligations. Item 9 outlines franchisee obligations, explicitly linking site selection and acquisition/lease to Section 5 of the Development Agreement and Item 11 of the FDD. This indicates that the Development Agreement dictates the process and requirements for choosing and securing locations for Churchs Chicken restaurants.
The Development Agreement grants the developer the right to develop franchised restaurants within a specific geographic area, known as the Development Area, during the Development Term. However, the franchisee must locate each Churchs Chicken restaurant at a specific location accepted by Churchs Chicken. The franchisee has to adhere to a Development Schedule, and for each restaurant to be developed, the franchisee must obtain Churchs Chicken's acceptance of the site by the site acceptance date listed in the Development Schedule. Failure to meet these deadlines constitutes a breach of the agreement, potentially leading to termination.
Churchs Chicken retains considerable control over site selection, and the franchisee's ability to develop restaurants is contingent upon securing approved locations within the designated timeframe. This arrangement ensures that Churchs Chicken maintains brand consistency and strategic placement of its restaurants, while the franchisee bears the responsibility of finding suitable sites that meet the franchisor's criteria. The Development Agreement is not a franchise agreement and only gives the Developer the opportunity to enter into Church's Texas Chicken franchise agreements for the operation of Franchised Restaurants at locations in the Development Area accepted by Cajun.