After the termination or expiration of the Churchs Chicken Development Agreement, is the developer allowed to operate under a name that gives the impression of being connected with Cajun or using the Churchs Chicken system?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
(b) have an ownership interest in any restaurant business (other than a Church's Restaurant) that specializes in the sale of fried chicken.
(3) Developer further covenants that following the expiration or earlier termination of this Agreement, regardless of the cause for termination, Developer shall not, either directly or indirectly, for itself, 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 that specializes in the sale of fried chicken (other than a Church's Restaurant) and that is located (i) in the Development Area or (ii) within a 5-mile radius of the location of any other Church's Restaurant that is then in existence or under development; or
(4) The restrictions in Sections 14.C.(2)(d) and 14.C.(3)(a) shall not apply to Developer's existing restaurant or foodservice operations, if any, which are identified in Schedule 2, nor shall they apply to other restaurants operated by Developer that are franchised by Cajun or its affiliates.
If a court finds that any restriction in Section 14.C.is not enforceable, it is the intent of the parties that the court modify such restriction to the extent reasonably necessary to protect the legitimate business interests of Cajun.
If, at any time during the restrictive period following expiration or earlier termination of this Agreement, Developer fails to comply with its obligations under this Section, that period of noncompliance will not be credited toward Developer's completion of the restrictive period provided that Cajun takes action to enforce the obligations under this Section within the restrictive period.
- **D.
Modification.** Cajun shall have the right, in its sole discretion, to reduce the extent of any covenant in this Section effective immediately upon Developer's receipt of notice, and Developer shall be bound by the covenant as so modified, which shall be fully enforceable notwithstanding the provisions of Section 21.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to the 2025 Churchs Chicken Franchise Disclosure Document, after the Development Agreement expires or terminates, the developer is restricted from certain activities. Specifically, for a period of two years, the developer cannot have an ownership interest in any restaurant business that specializes in the sale of fried chicken, excluding another Churchs Chicken restaurant, within the Development Area or within a 5-mile radius of an existing or developing Churchs Chicken location.
This restriction aims to prevent unfair competition by ensuring that former developers do not directly leverage their knowledge and experience gained from the Churchs Chicken system to benefit a competing fried chicken business in close proximity to Churchs Chicken restaurants. The FDD does not explicitly state that the developer cannot operate under a name that gives the impression of being connected with Cajun or using the Churchs Chicken system. However, the developer is restricted from operating a restaurant with a similar menu, theme, or concept.
It is important to note that these restrictions do not apply to the developer's existing restaurant or foodservice operations, if any, that are identified in the agreement's schedule, or to other restaurants operated by the developer that are franchised by Cajun or its affiliates. Additionally, Cajun has the right to reduce the extent of any covenant in this section at its discretion, effective immediately upon the developer's receipt of notice. If a court finds any restriction unenforceable, the parties intend for the court to modify the restriction to protect Cajun's legitimate business interests.
Prospective franchisees should seek clarification from Churchs Chicken regarding the specific limitations on using names or concepts that might be perceived as connected to the Churchs Chicken system after the Development Agreement's termination or expiration. Understanding these restrictions is crucial for planning future business ventures and ensuring compliance with the terms of the agreement.