When must a Churchs Chicken franchisee pay the Royalty Fee and advertising contributions to Cajun?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
tion of the Initial Term.
3. FEES
- A. Initial Franchise Fee. Simultaneously with Franchisee's execution of this Agreement, Franchisee shall pay to Cajun an initial franchise fee ("Initial Franchise Fee") in the amount specified in Schedule 1. The Initial Franchise Fee shall be in addition to any development fees paid by Franchisee to Cajun pursuant to a Church's Texas Chicken Development Agreement. Franchisee acknowledges and agrees that the Initial Franchise Fee is fully earned by Cajun when paid and is not refundable.
- B. Royalty Fee. In addition to all other amounts to be paid by Franchisee to Cajun, Franchisee shall pay to Cajun a nonrefundable and continuing weekly royalty fee (the "Royalty Fee") in an amount equal to 5% of the Gross Sales (as defined below) of the Franchised Restaurant for the preceding week for the right to use the System and the Proprietary Marks at the Franchised Location. If any taxes, fees or assessments are imposed on Cajun by reason of its acting as franchisor or licensing the Proprietary Marks under this Agreement, Franchisee shall reimburse Cajun the amount of those taxes, fees or assessments within 30 days after receipt of an invoice from Cajun.
C. Advertising Contributions.
- (1) Franchisee, recognizing the value of advertising and the importance of the standardization of advertising and promotion to the goodwill and public image of the System, shall contribute to the Cajun's Advertising Fund ("Advertising Fund") a weekly recurring, non-refundable Advertising Fund contribution equal to 5% of the Gross Sales of the Franchised Restaurant for the preceding week. Notwithstanding the foregoing, upon giving notice to Franchisee, Cajun may require Franchisee to contribute at least $25,000 per year to the Advertising Fund with respect to the Franchised Restaurant.
- (2) If the Franchised Restaurant participates in a Regional Advertising Cooperative pursuant to Section 5.B., then in lieu of contributing 5% of Gross Sales to the Advertising Fund as described above, (i) Franchisee shall contribute to the Advertising Fund a percentage of Gross Sales determined by Cajun not to exceed 1% of Gross Sales, and (ii) Franchisee shall contribute to the Regional Advertising Cooperative in an amount determined by the Cooperative, which when added to the Advertising Fund contribution must be at least 5% of the Gross Sales of the Franchised Restaurant. Church's Restaurants operated by Cajun and its affiliates shall contribute to the Advertising Fund and the Cooperatives on the same basis as comparable franchisees.
- **D.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, franchisees are required to pay a weekly royalty fee and advertising contributions based on a percentage of their Gross Sales. The royalty fee is a nonrefundable, continuing weekly fee equal to 5% of the Gross Sales of the Franchised Restaurant for the preceding week. Similarly, franchisees must contribute to Cajun's Advertising Fund a weekly, recurring, non-refundable amount equal to 5% of the Gross Sales of the Franchised Restaurant for the preceding week.
Cajun reserves the right to modify the method of payment for the Royalty Fee, advertising contributions, and other amounts owed under the agreement, provided they give notice to the franchisee. Franchisees are not entitled to withhold these payments due to any alleged non-performance by Cajun or for any other reason. Cajun also retains the right to apply any payment made by the franchisee to any outstanding obligation owed by the franchisee or its affiliates, regardless of any specific direction given by the franchisee regarding the application of funds.
Failure to maintain sufficient funds in the franchisee's account for payments constitutes a default of the agreement. Additionally, if a franchisee fails to pay any amount when due, they will incur a late payment fee of $100.00 plus 1.5% of the overdue balance per month. For any period of breach, Cajun can increase the Royalty Fee by 1% of Gross Sales, upon giving notice to the franchisee. These stipulations ensure timely payments and provide Cajun with remedies for any payment defaults.