For a Churchs Chicken franchisee, what happens if they are in default of the Sublease at the commencement of an Extension Period?

According to the 2025 Churchs Chicken Franchise Disclosure Document, a franchisee's right to extend the sublease is conditional. Specifically, the franchisee must not be in default of the sublease beyond any applicable notice and cure periods at the time the extension period commences.

In practical terms, this means that if a Churchs Chicken franchisee is in default of their sublease agreement (for example, due to unpaid rent or failure to maintain the premises) and has not cured the default within the time allowed by the sublease and any notices provided, they will not be able to extend the term of the sublease. This condition applies to both the first and any subsequent extension periods.

This provision protects Churchs Chicken by ensuring that franchisees operating under an extended term are in good standing with their landlords, reducing the risk of disruption to the business and maintaining the brand's reputation. It is important for prospective franchisees to carefully review the terms of both the franchise agreement and the sublease agreement to understand their obligations and the consequences of default.