After the transfer, expiration, or termination of the Churchs Chicken franchise agreement, for how long must a franchisee refrain from selling or leasing the Franchised Location to someone intending to operate a competing chicken restaurant?
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.
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, a franchisee is restricted from selling, assigning, leasing, or transferring the franchised location to any entity that the franchisee knows, or has reason to know, intends to operate a restaurant specializing in chicken or with a similar trade dress to the Churchs Chicken system. This restriction applies for a period of one year following the transfer, expiration, or earlier termination of the franchise agreement, regardless of the cause of termination.
This covenant requires the franchisee to include restrictive terms in any conveyance documents (selling, assigning, leasing, or transferring interest) to prevent a violating restaurant business from operating at the location during the one-year period. The franchisee must also take necessary steps to ensure these restrictions become a matter of public record.
This restriction aims to protect Churchs Chicken's market position by preventing a competitor from immediately taking over a former franchise location. This ensures that the goodwill and customer base developed by Churchs Chicken are not directly transferred to a competing business. Cajun, the franchisor, retains the right to reduce the extent of this covenant at its discretion, providing flexibility in specific situations.