Does the Churchs Chicken Guaranty Agreement include any specific geographic limitations?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Following the expiration or earlier termination of the Agreement, regardless of the cause for termination, Guarantor shall not, either directly or indirectly, for Guarantor, or through, on behalf of, or in conjunction with any person or entity: for a period of two 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 located or within a 5-mile radius of the Franchised Location or located within a 5-mile radius of the location of any Church's Restaurant that is then in existence.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, the Guaranty Agreement does include geographic limitations. Specifically, following the expiration or termination of the Franchise Agreement, the guarantor is restricted from having an ownership interest in any restaurant business (other than a Churchs Chicken restaurant) that specializes in fried chicken. This restriction applies for a period of two years.
The geographic scope of this restriction includes two areas: first, the area within a 5-mile radius of the Franchised Location, and second, the area within a 5-mile radius of any existing Churchs Chicken restaurant. This means that the guarantor cannot be involved in a competing fried chicken restaurant within these specified zones.
This clause is designed to protect Churchs Chicken's market share and prevent unfair competition from individuals who have inside knowledge of the Churchs Chicken system due to their role as a guarantor. A prospective franchisee should carefully consider these limitations and ensure that the guarantor understands and is willing to comply with these restrictions, as they could impact future business opportunities for the guarantor.