During the term of the Development Agreement, what customer-related action is prohibited for a Churchs Chicken developer?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Development Agreement | Summary |
|---|---|---|
| q. Non-Competition Covenants During the Term of the Development Agreement | §14 | In-term, non-competition covenants include a ban on diverting any customer or potential customer; owning any restaurant business that specializes in selling fried chicken (which restriction does not apply to your existing Restaurants, if any, or to other restaurants you operate that are franchised by us or our affiliates). With respect to individual owners, the same covenant is contained in § 4 of the Guaranty Agreement. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 50–55)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, during the term of the Development Agreement, a developer is prohibited from diverting any customer or potential customer. This restriction is part of the in-term non-competition covenants outlined in Section 14 of the Development Agreement.
This means that while the Development Agreement is in effect, a Churchs Chicken developer cannot take actions that would cause customers or potential customers to patronize a competing business instead of Churchs Chicken. This restriction aims to protect Churchs Chicken's customer base and market share by preventing developers from using their knowledge or resources to benefit a competing fried chicken business.
It is important to note that this non-competition covenant applies specifically to owning any restaurant business that specializes in selling fried chicken. However, this restriction does not apply to existing restaurants the developer may own or other restaurants they operate that are franchised by Churchs Chicken or its affiliates. Individual owners are also subject to the same covenant, as detailed in Section 4 of the Guaranty Agreement.