Does the Churchs Chicken franchise agreement survive termination?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
e and would be unable to adequately encourage a free exchange of ideas and information among Church's Restaurants if franchisees were permitted to hold interests in competitive businesses; and (e) restrictions on Franchisee's right to hold interests in, or perform services for, competitive businesses will not hinder Franchisee's activities.
- (2) Accordingly, Franchisee covenants and agrees that during the Initial Term and any Renewal Term, Franchisee 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) Franchisee further covenants that following the transfer, expiration or earlier termination of this Agreement, regardless of the cause for termination, Franchisee shall not, either directly or indirectly, for itself or through, on behalf of, or in conjunction with any person or entity:
- (a) for a period of 2 years, have an ownership interest in any restaurant business (other than a Church's Restaurant) that specializes in the sale of fried chicken and that is (i) located at or within a 5-mile radius of the Franchised Location, or (ii) located within a 5-mile radius of any Church's Restaurant that is then in existence or under development.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to the 2025 Churchs Chicken Franchise Disclosure Document, certain obligations do survive the termination or expiration of the franchise agreement. Specifically, both the franchisee and any guarantor are subject to certain restrictions.
For a period of two years following the termination or expiration of the agreement, 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. This restriction applies to businesses located at or within a 5-mile radius of the former franchised location, or within a 5-mile radius of any existing Churchs Chicken restaurant or one under development. This prevents a former franchisee from directly competing with Churchs Chicken in close proximity to existing locations.
Similarly, any guarantor is also restricted for two years after termination from having an ownership interest in a fried chicken restaurant (excluding Churchs Chicken) within the development area or within a 5-mile radius of any Churchs Chicken restaurant. These restrictions do not apply to the developer's existing restaurant or foodservice operations, if any, which are identified in the agreement's schedule, or to other restaurants operated by the developer that are franchised by Churchs Chicken or its affiliates. Churchs Chicken also retains the right to reduce the extent of any covenant, which becomes effective immediately upon the developer's receipt of notice.