Are there confidentiality and non-competition covenants included in the Guaranty agreement for Churchs Chicken?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
(b) Guarantor shall not, during the Initial Term, any Renewal Term, or for a period of two years after the expiration or termination of the Franchise Agreement (or with respect to trade secrets, during the Initial Term, any Renewal Term, or any time thereafter), communicate or disclose any trade secrets or confidential or proprietary information or know-how of the System to any unauthorized person or entity, or do or perform, directly or indirectly, any other acts injurious or prejudicial to any of the Proprietary Marks or the System. Any and all information, knowledge, know how and techniques, including all drawings, materials, equipment, specifications, recipes, techniques and other data that Cajun or its affiliates designate as confidential shall be deemed confidential for purposes of this Guaranty.
4. Covenants.
(a) During the Initial Term and any Renewal Term, Guarantor shall not, either directly or indirectly, for Guarantor, or through, on behalf of, or in conjunction with any person or entity:
(i) divert or attempt to divert any business or customer, or potential business or customer, of any restaurant franchised or operated by Cajun or its affiliates to any competitor, by direct or indirect inducement or otherwise or do or perform, directly or indirectly, any other act injurious or prejudicial to the goodwill associated with the Proprietary Marks or the System; or
(ii) have an ownership interest in any restaurant business (other than a Church's Restaurant) that specializes in the sale of fried chicken.
(b) Following the expiration or earlier termination of the Agreement, regardless of the cause for termination, Guarantor shall not, either directly or indirectly, for Guarantor, 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 (other than a Church's Restaurant) that specializes in the sale of fried chicken and that is located or within a 5-mile radius of the Franchised Location or located within a 5-mile radius of the location of any Church's Restaurant that is then in existence.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 49–50)
What This Means (2025 FDD)
Yes, according to Churchs Chicken's 2025 Franchise Disclosure Document, the Guaranty Agreement includes both confidentiality and non-competition covenants. During the term of the agreement, the guarantor is restricted from divulging trade secrets or confidential information related to the Churchs Chicken system to unauthorized parties. They are also prohibited from actions that could harm the Proprietary Marks or the System. This extends to all information, knowledge, and techniques designated as confidential by Churchs Chicken.
Specifically, the guarantor cannot divert business away from Churchs Chicken restaurants or have an ownership interest in any restaurant business (other than a Churchs Chicken restaurant) that specializes in selling fried chicken.
Post-termination, the non-competition covenant extends for two years, preventing the guarantor from owning a restaurant business specializing in fried chicken within a 5-mile radius of the franchised location or any existing Churchs Chicken restaurant. This ensures that former franchisees or related parties do not directly compete with Churchs Chicken using the knowledge and experience gained during their association with the franchise.