Does the expiration or termination of the Churchs Chicken agreement affect the survival of the rights and remedies provisions outlined in Section 24?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
, Developer will have access to valuable trade secrets, specialized training and confidential information from Cajun and its affiliates regarding the development, operation, purchasing, sales and marketing methods and techniques of Cajun and its affiliates and the System; (b) the System and the opportunities, associations and experience established and acquired by Developer under this Agreement are of substantial and material value; (c) in developing the System, Cajun and its affiliates have made and continue to make substantial investments of time, technical and commercial research, and money; (d) Cajun would be unable to adequately protect the System and its trade secrets and confidential and proprietary information against unauthorized use or disclosure and would be unable to adequately encourage a free exchange of ideas and information among Church's Restaurants if franchisees or developers were permitted to hold interests in competitive businesses; and (e) restrictions on Developer's right to hold interests in, or perform services for, competitive businesses will not hinder Developer's activities.
- (2) Accordingly, Developer covenants and agrees that during the Development Term, Developer shall not, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with, any person or entity:
- (a) divert or attempt to divert any business or customer, or potential business or customer, of any restaurant franchised or operated by Cajun or its affiliates to any competitor, by direct or indirect inducement or otherwise or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Proprietary Marks or the System; or
- (b) have an ownership interest in any restaurant business (other than a Church's Restaurant) that specializes in the sale of fried chicken.
- (3) Developer further covenants that following the expiration or earlier termination of this Agreement, regardless of the cause for termination, Developer shall not, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with any person or entity, for a period of two years, have an ownership interest in any restaurant business that specializes in the sale of fried chicken (other than a Church's Restaurant) and that is located (i) in the Development Area or (ii) within a 5-mile radius of the location of any other Church's Restaurant that is then in existence or under development; or
- (4) The restrictions in Sections 14.C.(2)(d) and 14.C.(3)(a) shall not apply to Developer's existing restaurant or foodservice operations, if any, which are identified in Schedule 2, nor shall they apply to other restaurants operated by Developer that are franchised by Cajun or its affiliates. If a court finds that any restriction in Section 14.C.is not enforceable, it is the intent of the parties that the court modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Cajun.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
Based on the 2025 Churchs Chicken Franchise Disclosure Document, the expiration or termination of the agreement does have implications for certain rights and obligations of the franchisee. Specifically, several sections outline post-termination or expiration restrictions and rights of Cajun Global LLC, the franchisor. These primarily concern non-compete clauses and the handling of proprietary information.
Following the expiration or termination of the agreement, the franchisee is subject to certain restrictions. For a period of two years, the franchisee is restricted from having an ownership interest in any restaurant business (other than a Churchs Chicken restaurant) that specializes in the sale of fried chicken within the Development Area or within a 5-mile radius of any existing or developing Churchs Chicken restaurant. This non-compete obligation is designed to protect Churchs Chicken's market share and brand integrity.
However, these restrictions do not apply to the franchisee's existing restaurant or foodservice operations, if any, which are identified in the agreement's schedule. Additionally, Cajun Global LLC retains the right to modify or reduce the extent of any covenant in this section, effective immediately upon the franchisee's receipt of notice. This modification can provide flexibility but also introduces uncertainty for the franchisee. If a franchisee fails to comply with the obligations, the period of noncompliance will not be credited toward the completion of the restrictive period, provided Cajun takes action to enforce the obligations within the restrictive period.
Upon termination or expiration, the franchisee loses the right to further develop or open Churchs Chicken restaurants in the Development Area. Cajun Global LLC regains the right to operate or license others to operate restaurants under the Churchs Chicken brand within the Development Area. The franchisee must also return the Manual and all other materials and information furnished by Cajun, except those related to a franchised restaurant operating under an effective franchise agreement. These stipulations ensure that Churchs Chicken can maintain control over its brand and operations after a franchise agreement ends.