Are there any exceptions to the post-term non-competition covenant for Churchs Chicken franchisees?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
ou should read these provisionsin the agreements attached to this disclosure document.**
DEVELOPMENT AGREEMENT
| Provision | Section in Development Agreement | Summary | |
|---|---|---|---|
| a. Length of the Development | §1 | Until the last date of the Development Schedule. | |
| Term | |||
| b. Renewal or Extension of Term | Not applicable | ||
| c. Requirements for You to | Not applicable | ||
| Renew or Extend | |||
| d. Termination by You | Not applicable | ||
| e. Termination by Us Without | Not applicable | ||
| Cause | |||
| f. Termination by Us with Cause | §15 | We can terminate only if you default under the agreement and for other stated grounds. | |
| g. “Cause” Defined - Curable Defaults | §15 | You have 30 days after notice to cure certain defaults susceptible of cure, but only 10 days to cure non-payment defaults. |
| 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. |
| r. |
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, there are specific exceptions to the post-term non-competition covenants for both Development Agreements and Franchise Agreements. The standard post-term non-competition covenant includes a 2-year ban on owning any restaurant business that specializes in selling fried chicken within a specified area. For Development Agreements, this area is the Development Area or within a 5-mile radius of any existing Restaurant. For Franchise Agreements, the restricted area is within a 5-mile radius of the franchisee's Restaurant or any Restaurant then in existence.
However, this restriction does not apply to the franchisee's existing Restaurants, if any, or to other restaurants the franchisee operates that are franchised by Churchs Chicken or its affiliates. This means a franchisee can continue to operate existing Churchs Chicken restaurants or other franchised restaurants under the same brand or its affiliates, even after the termination or expiration of the Development or Franchise Agreement. This exception provides some flexibility for franchisees who may have multiple restaurant businesses.
It is important to note that these covenants and exceptions are subject to state laws, which may impose additional restrictions or offer further protections to franchisees. For example, addenda for franchisees in states like Washington, North Dakota, Minnesota, New York, and California modify certain terms of the standard agreements to comply with local franchise laws. Therefore, prospective franchisees should carefully review the state-specific addenda and consult with legal counsel to understand the full scope and implications of the non-competition covenants in their specific jurisdiction.