Are there any exceptions to the in-term non-competition covenant for Churchs Chicken developers?
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, the in-term non-competition covenants for developers include a ban on diverting customers and owning any restaurant business specializing in fried chicken. However, there are exceptions to this restriction. The non-competition covenant does not apply to a developer's existing restaurants, if any, or to other restaurants they operate that are franchised by Churchs Chicken or its affiliates. This means a developer can continue to operate existing restaurants, even if they sell fried chicken, and can also operate other franchises offered by Churchs Chicken without violating the non-compete agreement.
This exception provides flexibility for developers who may already have restaurant businesses or who wish to diversify their holdings within the Churchs Chicken franchise system. It allows them to expand their business interests without being penalized for competing with their own Churchs Chicken restaurants. The same covenant also applies to individual owners, as detailed in the Guaranty Agreement.
It is important for prospective Churchs Chicken developers to carefully review Section 14 of the Development Agreement and Section 4 of the Guaranty Agreement to fully understand the scope and limitations of the in-term non-competition covenants and the specific exceptions that apply. Understanding these provisions is crucial for making informed business decisions and avoiding potential breaches of the agreement.