Is a Churchs Chicken franchisee allowed to engage in any business or advertising practice that may be injurious to the goodwill associated with the Proprietary Marks?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
ade 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 Franchisee 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 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.
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, for a period of 1 year, sell, assign, lease or transfer the Franchised Location to any person or entity which Franchisee knows, or has reason to know, intends to operate a restaurant business at the Franchised Location that specializes in the sale of chicken or has a method of operation or trade dress similar to that employed in the System. Franchisee, by the terms of any conveyance selling, assigning, leasing or transferring its interest in the Franchised Location, shall include these restrictive covenants as are necessary to ensure that a restaurant business that would violate this Section 17.D.(3) is not operated at the Franchised Location for this 1-year period, and Franchisee shall take all steps necessary to ensure that these restrictive covenants become a matter of public record.
(4) The restrictions in Sections 17.D.(2)(b) and 17.D.(3)(a) shall not apply to Franchisee's existing restaurant or foodservice operations, if any, which are identified in Schedule 1, nor shall they apply to other restaurants operated by Franchisee that are franchised by Cajun or its affiliates. If a court finds that any restriction in Section 17.D.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to the 2025 Churchs Chicken Franchise Disclosure Document, franchisees are prohibited from engaging in any activities that could harm the goodwill associated with Churchs Chicken's proprietary marks. During the initial and any renewal terms of the franchise agreement, a franchisee cannot divert business away from Churchs Chicken or perform any actions that could be detrimental to the goodwill of the brand or its system. This restriction applies to both direct and indirect actions, ensuring that franchisees actively protect the brand's reputation and customer base.
This obligation extends beyond the term of the franchise agreement. For a period of two years after the agreement's expiration or termination, a franchisee is restricted from holding an ownership interest in any restaurant business (excluding another Churchs Chicken) that specializes in fried chicken within a five-mile radius of the former franchised location or any existing Churchs Chicken restaurant. This non-compete clause is designed to prevent former franchisees from leveraging their experience and knowledge to directly compete with Churchs Chicken shortly after leaving the system.
The Franchise Disclosure Document also stipulates that the guarantor, during the term of the agreement and for two years post-termination, must not disclose any trade secrets or confidential information related to the Churchs Chicken system. Furthermore, the guarantor is prohibited from performing any actions that could be harmful to the proprietary marks or the system. This includes safeguarding all confidential information, knowledge, and techniques designated by Churchs Chicken, ensuring that the brand's competitive advantage is maintained. Franchisees are also required to inform Churchs Chicken of any infringements on the Proprietary Marks and must not take any action regarding such infringements without the franchisor's approval.