After the termination or expiration of a Churchs Chicken franchise agreement, is the franchisee allowed to operate a business that gives the impression of being connected with Churchs Chicken?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee further covenants that following the transfer, expiration or earlier termination of this Agreement, regardless of the cause for termination, Franchisee 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 1 year, sell, assign, lease or transfer the Franchised Location to any person or entity which Franchisee knows, or has reason to know, intends to operate a restaurant business at the Franchised Location that specializes in the sale of chicken or has a method of operation or trade dress similar to that employed in the System. Franchisee, by the terms of any conveyance selling, assigning, leasing or transferring its interest in the Franchised Location, shall include these restrictive covenants as are necessary to ensure that a restaurant business that would violate this Section 17.D.(3) is not operated at the Franchised Location for this 1-year period, and Franchisee shall take all steps necessary to ensure that these restrictive covenants become a matter of public record.
(4) The restrictions in Sections 17.D.(2)(b) and 17.D.(3)(a) shall not apply to Franchisee's existing restaurant or foodservice operations, if any, which are identified in Schedule 1, nor shall they apply to other restaurants operated by Franchisee that are franchised by Cajun or its affiliates. If a court finds that any restriction in Section 17.D. 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 the transfer, expiration or earlier termination of this Agreement, Franchisee fails to comply with its obligations under this Section, that period of noncompliance will not be credited toward Franchisee's completion of the restrictive period provided that Cajun takes action to enforce the obligations under this Section within the restrictive period.
E. Modification. Cajun shall have the right, in its sole discretion, to reduce the extent of any covenant in this Section effective immediately upon Franchisee's receipt of notice, and Franchisee shall be bound by the covenant as so reduced, which shall be fully enforceable notwithstanding the provisions of Section 25.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to the 2025 Churchs Chicken Franchise Disclosure Document, following the transfer, expiration, or earlier termination of the franchise agreement, the franchisee is restricted from actions that might suggest an association with Churchs Chicken. Specifically, for a period of one year, the franchisee cannot sell, assign, lease, or transfer the franchised location to any entity that they know or have reason to know intends to operate a restaurant business specializing in chicken with a similar method of operation or trade dress to the Churchs Chicken system.
To ensure compliance, any conveyance selling, assigning, leasing, or transferring the franchisee's interest in the location must include restrictive covenants. These covenants are designed to prevent a restaurant business that would violate these terms from operating at the location during the one-year period. The franchisee is obligated to take all necessary steps to ensure these restrictions are a matter of public record.
These restrictions do not apply to the franchisee's existing restaurant or foodservice operations, if any, that are identified in Schedule 1 of the agreement, nor do they apply to other restaurants operated by the franchisee that are franchised by Cajun or its affiliates. However, Churchs Chicken retains the right to modify or reduce the extent of any covenant, which becomes effective immediately upon the franchisee's receipt of notice. This modification is fully enforceable, regardless of other provisions in the agreement.