What must a Churchs Chicken franchisee do to initiate a proposed transfer?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
acter, experience and demonstrated or purported ability in developing and operating high quality foodservice operations. Accordingly, neither Franchisee nor any person or entity which directly or indirectly controls Franchisee shall sell, assign, transfer, convey, or give away any interest in Franchisee, this Agreement, the Franchised Restaurant, the assets of the Franchised Restaurant, the Franchised Location or any other assets pertaining to Franchisee's operations under this Agreement (collectively "Transfer") without the prior consent of Cajun.
- (2) Except as otherwise provided in this Agreement, any purported Transfer, by operation of law or otherwise, not having the prior consent of Cajun shall be null and void.
- (3) If Franchisee engages in a Transfer without the prior written consent of Cajun, and Cajun nonetheless accepts the purported transferee as a franchisee, then Franchisee shall pay Cajun for an unauthorized Transfer fee equal to $25,000.
- B. Conditions to Approval of Transfer and Transferee. Franchisee shall advise Cajun in writing of any proposed Transfer, submit (or cause the proposed transferee to submit) a franchise application for the proposed transferee, and submit a copy of all contracts, agreements or proposals, and all other information requested by Cajun relating to the proposed Transfer. If Cajun does not exercise its right of first refusal as described in Section 15.I., the decision as to whether or not to approve a proposed Transfer shall be made by Cajun in its sole discretion and may include numerous factors deemed relevant by Cajun. These factors may include, but will not be limited to, the following:
- (1) The proposed transferee (and if the proposed transferee is other than an individual, such owners of an interest in the transferee as Cajun may request) must demonstrate that it has extensive experience in high quality restaurant operations of a character and complexity similar to the restaurants franchised by Cajun or its affiliates; meets the managerial, operational, experience, quality, character and business standards for a franchisee promulgated by Cajun from time to time; possesses a good character, business reputation and credit rating; has an organization whose management culture is compatible with Cajun's management culture; and has adequate financial resources and working capital to meet Franchisee's obligations under this Agreement.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, a franchisee who intends to transfer their franchise must first inform Churchs Chicken in writing about the proposed transfer. This notification must occur within 10 days of receiving a bona fide offer from a third party or deciding to undertake the transfer. The franchisee must also provide all information and documentation related to the proposed transfer that Churchs Chicken may reasonably require. This initial notification is a critical step, as it triggers Churchs Chicken's right of first refusal.
Following the initial notification, Churchs Chicken has the option to exercise its right of first refusal, allowing them to purchase the franchisee's interest on the same terms offered by the third party. Churchs Chicken has 30 days after receiving the notification and all required documents to decide whether to exercise this right. If the transfer involves multiple Churchs Chicken restaurants, Churchs Chicken can choose to purchase all or some of them.
If Churchs Chicken decides not to exercise its right of first refusal, the franchisee can proceed with seeking Churchs Chicken's approval for the transfer. The franchisee must submit (or ensure the proposed transferee submits) a franchise application for the proposed transferee and provide copies of all contracts, agreements, proposals, and any other information Churchs Chicken requests. Churchs Chicken then has the sole discretion to approve or deny the transfer based on various factors, including the transferee's experience, financial resources, and compatibility with Churchs Chicken's standards. Meeting these conditions is essential for a franchisee looking to transfer their Churchs Chicken franchise.