After the expiration or termination of the Churchs Chicken Development Agreement, what geographic areas are included in the restriction on having an ownership interest in a fried chicken restaurant?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
(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.
If, at any time during the restrictive period following expiration or earlier termination of this Agreement, Developer fails to comply with its obligations under this Section, that period of noncompliance will not be credited toward Developer's completion of the restrictive period provided that Cajun takes action to enforce the obligations under this Section within the restrictive period.
- **D.
Modification.** Cajun shall have the right, in its sole discretion, to reduce the extent of any covenant in this Section effective immediately upon Developer's receipt of notice, and Developer shall be bound by the covenant as so modified, which shall be fully enforceable notwithstanding the provisions of Section 21.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to the 2025 Churchs Chicken Franchise Disclosure Document, following the expiration or termination of the Development Agreement, the developer is restricted from having an ownership interest in a fried chicken restaurant (other than a Churchs Chicken restaurant) for a period of two years. This restriction applies to restaurants located (i) in the Development Area or (ii) within a 5-mile radius of any existing or under-development Churchs Chicken restaurant.
This means that a former Churchs Chicken developer cannot open or invest in a competing fried chicken business within their original Development Area or within 5 miles of any Churchs Chicken location. This restriction aims to prevent the developer from using their knowledge and experience gained during the Development Agreement to directly compete with Churchs Chicken.
However, these restrictions do not apply to the developer's existing restaurant or foodservice operations, if any, which are identified in Schedule 2 of the agreement, nor do they apply to other restaurants operated by the developer that are franchised by Cajun or its affiliates. This clause protects the developer's pre-existing business interests and allows them to continue operating other franchises under the Cajun umbrella.
Churchs Chicken also retains the right to modify these restrictions. Cajun has the discretion to reduce the extent of any covenant, effective immediately upon the developer's receipt of notice. This modification ensures that Churchs Chicken can adjust the restrictions as needed to protect its business interests, and the developer is bound by any such modifications.