How does the litigation described in Item 3 relate to the franchisee's obligation to operate the Churchs Chicken restaurant according to the franchise agreement, as outlined in Item 9?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
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ITEM 3 LITIGATION
Franchisor Initiated Litigation 2024 Fiscal Year – Enforcement of Express Contract Terms:
Cajun Global, LLC v. Carolina Café Services, Inc., Case No. 24CV003456 (Fulton County, Georgia Superior Court). We filed suit against defendant on March 19, 2024. Defendant is a former Church's Chicken franchisee, which ceased operating its franchised restaurant before the end of the franchise agreement term. We brought claims for breach of the franchise agreement, lost royalty damages resulting from the premature closure of the restaurant, and attorneys' fees. On March 6, 2025, by agreement of the parties, the Court entered a Consent Final Judgment finding in favor of us on each of our claims and awarding us damages of $136,000.00, plus pre- and post-judgment interest, thereby terminating the litigation.
Other Concluded Franchise Litigation of Cajun Global:
Saheer Ur Rehman Chaudhry & Ors v. Cajun Operating Company, Claim Number: A40LS211 (High Court of Justice, Queen's Bench Division, Leeds District Registry, March 11, 2014) (the "211 Claim") and Ali Nawaz, Rob Nawaz and Sukhraj Singh Klair & Ors v Cajun Operating Company, Claim Number: A40LS212, (High Court of Justice, Queen's Bench Division, Leeds District Registry, March 11, 2014) (the "212 Claim"). Former franchisees of the Texas Chicken brand brought these two claims against Cajun Operating claiming that Cajun Operating and its employees and consultants used fraud, negligent misstatements and deceit to induce the claimants to develop Texas Chicken restaurants in the U.K. All of the restaurants opened by the claimants were subsequently closed and claimants sought monetary damages for the amount of their investment in the franchises plus costs and interests. Cajun Operating and the claimants participated in a non-binding mediation procedure on November 11, 2015 during which the claimants dismissed the case with prejudice in consideration for a payment by Cajun Operating in the amount of £350,000 and no admission of liability on the part of Cajun Operating.
Cajun Global LLC, d/b/a Church's Chicken, et al. v. Thomas & Irons, LLC, et al., Case No. 1:18 cv-00538-RWS (United States District Court for the Northern District of Georgia, Atlanta Division) (the "Georgia Lawsuit"). We filed the Georgia Lawsuit on February 2, 2018 against our franchisees and their affiliates for injunctive relief, liquidated damages, trademark infringement, specific performance and breach of the franchise agreements when the franchisees continued to operate one restaurant and failed to de-identify another restaurant that had been closed following the terminations of both franchise agreements. On February 12, 2018, some of the defendants in the Georgia Lawsuit filed the following lawsuit and obtained a ten-day temporary restraining order enjoining us from enforcing our termination rights under the same franchise agreements at issue in the Georgia Lawsuit: Thomas & Irons, LLC, et al. v.
What This Means (2025 FDD)
According to the 2025 FDD, Item 3, which covers litigation, demonstrates how Churchs Chicken enforces the franchise agreement, which includes the franchisee's operational obligations. One case, Cajun Global, LLC v. Carolina Café Services, Inc., highlights this. Churchs Chicken sued a former franchisee who ceased operations before the agreement's term ended, claiming breach of contract and lost royalty damages. The court ruled in favor of Churchs Chicken, awarding $136,000.00 in damages, plus interest. This shows Churchs Chicken's willingness to pursue legal action to ensure franchisees adhere to the agreed-upon terms, including maintaining operations for the duration of the franchise agreement.
Another case, Cajun Global LLC, d/b/a Church's Chicken, et al. v. Thomas & Irons, LLC, et al., further illustrates this point. Churchs Chicken filed suit against franchisees for continuing to operate one restaurant and failing to de-identify another after the franchise agreements were terminated. While this case was settled with Churchs Chicken purchasing the operating restaurant for $175,000 and both parties dismissing all claims, it underscores the brand's commitment to protecting its trademarks and operational standards, even after termination.
These legal actions described in Item 3 emphasize the importance of franchisees fulfilling their obligations under the franchise agreement, as detailed in Item 9. Prospective franchisees should understand that Churchs Chicken takes breaches of contract seriously and will pursue legal remedies to protect its brand and system standards. This includes ensuring restaurants remain open as agreed and that terminated locations are properly de-identified to avoid confusion and maintain brand integrity.