Are there any exceptions to the restrictions on a Churchs Chicken developer's right to hold interests in competitive businesses?
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 Churchs Chicken's 2025 Franchise Disclosure Document, there are specific exceptions to the restrictions placed on a developer's right to hold interests in competitive businesses. During the Development Term, a developer cannot have an ownership interest in any restaurant business (other than a Church's Restaurant) that specializes in the sale of fried chicken.
However, these restrictions do not apply to a developer's existing restaurant or foodservice operations, if any, which are identified in Schedule 2 of the agreement. Additionally, the restrictions do not apply to other restaurants operated by the developer that are franchised by Cajun or its affiliates. This means a developer may continue to operate existing restaurants or those franchised by Cajun, even if they compete with Churchs Chicken.
After the Development Agreement expires or is terminated, the developer is restricted for two years from having an ownership interest in a restaurant business specializing in fried chicken (other than a Church's Restaurant) within the Development Area or within a 5-mile radius of any existing or developing Churchs Chicken restaurant. Again, this restriction does not apply to existing restaurants or foodservice operations listed in Schedule 1 of the agreement, or to restaurants franchised by Cajun or its affiliates. Cajun also retains the right to reduce the extent of any covenant in this section at its sole discretion, effective immediately upon the developer's receipt of notice.