If the Churchs Chicken franchisee is an individual or partnership of individuals, are they personally liable for breaches of the Franchise Agreement?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) If Franchisee is an individual, or a partnership comprised solely of individuals, Franchisee makes the following additional representations and warranties: (a) each individual has executed this Agreement; (b) each individual shall be jointly and severally bound by, and personally liable for, the timely and complete performance and any breach of each and every provision of this Agreement; and (c) notwithstanding any Transfer for convenience of ownership pursuant to Section 15.F., each individual shall continue to be jointly and severally bound by, and personally liable for, the timely and complete performance and any breach of each and every provision of this Agreement.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, if the franchisee is an individual or a partnership of individuals, each individual is jointly and severally bound by the Franchise Agreement. This means that each individual is personally liable for the timely and complete performance of the agreement and any breaches of it. This personal liability extends throughout the term of the agreement, regardless of any ownership transfers for convenience.
This condition has significant implications for prospective franchisees. Unlike forming a corporation or LLC, where personal assets are typically shielded from business liabilities, individuals and partners expose their personal wealth to the risks associated with the franchise. If the Churchs Chicken franchise incurs debt, faces lawsuits, or fails to meet its obligations under the Franchise Agreement, the franchisee's personal assets could be at risk.
Churchs Chicken requires this personal guarantee to ensure that franchisees are fully committed to the success of the business and adhere strictly to the franchise agreement terms. This arrangement is relatively common in the franchise industry, particularly for smaller or newer franchise systems, as it provides the franchisor with added security.
Before signing a Franchise Agreement with Churchs Chicken, prospective franchisees should carefully consider the risks associated with personal liability and seek legal and financial advice. Understanding the full extent of their obligations and potential exposure is crucial for making an informed decision.