In the event of purchasing an interest in a Churchs Chicken franchise, what representations and warranties is Cajun entitled to?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon the expiration or termination of this Agreement, for any reason, Cajun shall have the option to purchase from Franchisee some or all of the assets used in the Franchised Restaurant ("Assets"), including, without limitation, leasehold improvements, equipment, vehicles, furnishings, fixtures, signs and inventory (non-perishable products, materials and supplies) used in the Franchised Restaurant, the real estate fee simple or the lease or sublease for the Franchised Location, as applicable, and any governmental approvals necessary to operate the Franchised Restaurant.
If Cajun intends to exercise its option, Cajun must give notice to Franchisee within 30 days after the effective date of termination or expiration.
Cajun may assign this option to purchase the Assets to another person or entity.
Cajun or its assignee shall be entitled to all customary representations and warranties as to: (1) ownership, condition and title of the Assets; (2) liens and encumbrances on the Assets; (3) compliance with environmental laws at, in or upon the Franchised Location; and (4) validity of contracts and liabilities inuring to Cajun or affecting the Assets, whether contingent or otherwise.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, when Cajun exercises its option to purchase assets from a franchisee upon termination or expiration of the franchise agreement, Cajun is entitled to customary representations and warranties. These include assurances regarding the ownership, condition, and title of the assets, as well as any liens or encumbrances affecting them.
Specifically, Cajun is warranted compliance with environmental laws at the franchised location. Additionally, Cajun receives assurances regarding the validity of contracts and liabilities that could affect the assets, whether these liabilities are contingent or otherwise. These warranties help protect Cajun from inheriting unforeseen legal or financial issues related to the assets they are acquiring.
In the event that a franchisee intends to transfer their interest in a Churchs Chicken franchise, Cajun has a right of first refusal. If Cajun elects to purchase the interest, they are entitled to customary representations and warranties related to ownership, condition, and title, liens and encumbrances, compliance with environmental laws, and the validity of contracts affecting the assets. This ensures Cajun can make an informed decision when considering the purchase of a franchise interest, mitigating potential risks associated with the transfer.