For Churchs Chicken, what equity ownership interest in Developer must the Operating Principal have at all times?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- **G.
Operating Principal.** Developer shall designate and retain an individual to serve as the "Operating Principal." The Operating Principal as of the date of this Agreement is identified in Schedule 3.
Unless waived in writing by Cajun, the Operating Principal shall meet all of the following qualifications:
(1) The Operating Principal, at all times, shall have at least a 10% equity ownership interest in Developer (unless Developer is a publicly-held entity or a wholly-owned subsidiary of a publiclyheld entity).
(2) The Operating Principal, at all times, shall be a member of the Continuity Group and, at a minimum, have full control over the day-to-day activities, including operations, of Developer, including control over the standards of operation and financial performance.
(3) The Operating Principal shall devote full-time and best efforts to supervising the operation of Developer and Franchised Restaurants operated by Developer or its affiliates and shall not
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, the Operating Principal must maintain a minimum equity ownership in the Developer entity. Specifically, the Operating Principal is required to have at least a 10% equity ownership interest in the Developer at all times. This requirement is in place unless the Developer is a publicly-held entity or a wholly-owned subsidiary of a publicly-held entity, in which case the equity requirement may not apply.
This equity stake ensures that the Operating Principal has a vested interest in the success of the Churchs Chicken business. Beyond the equity requirement, the Operating Principal must also be a member of the Continuity Group, with full control over the day-to-day operations, including operational standards and financial performance. They are also expected to devote their full-time efforts to supervising the operations of the Developer and the franchised restaurants, and they cannot engage in other business activities that demand substantial management responsibility.
For a prospective Churchs Chicken franchisee, this means that the person designated as the Operating Principal must be prepared to make a significant equity investment in the franchise. This requirement helps to align the interests of the Operating Principal with those of the franchisor, Cajun, and ensures a high level of commitment to the business. It is important for potential franchisees to carefully consider this requirement and ensure that their chosen Operating Principal meets these qualifications to avoid any issues with compliance.