Under what circumstances can Cajun terminate the Churchs Chicken Development Agreement without providing an opportunity to cure?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
her 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.
15. TERMINATION
- A. Grounds for Termination. Cajun may terminate this Agreement, and the rights granted by this Agreement, upon notice to Developer without an opportunity to cure upon the occurrence of any of the following events:
- (1) Developer fails to comply with the Development Schedule for any reason, including failing to: (a) obtain Cajun's acceptance of a site by the applicable site acceptance date listed in Schedule 2; or (b) have open and operating the number of Franchised Restaurants required by the Development Schedule. A default under this Section 15.A.(1) shall not constitute a default under any existing Franchise Agreement between Developer and Cajun or its affiliates.
- (2) Developer begins construction of a Franchised Restaurant before: (a) Cajun has accepted the site for that Franchised Restaurant; (b) Developer has received notification from Cajun that it has accepted the Construction Plans for that Franchised Restaurant; (c) Developer has provided Cajun a copy of the fully-executed lease or sublease for the Franchised Restaurant premises, or if Developer owns the premises, proof of Developer's ownership interest;
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, Cajun may terminate the Development Agreement without allowing the developer an opportunity to cure under several specific circumstances. These include failure to comply with the Development Schedule, such as not obtaining site acceptance by the specified date or failing to have the required number of restaurants open and operating. Starting construction before site acceptance, approval of construction plans, providing a fully-executed lease copy, or securing required insurance also constitute grounds for immediate termination.
Additionally, Churchs Chicken can terminate the agreement without opportunity to cure if the developer becomes insolvent, files for bankruptcy, makes an assignment for the benefit of creditors, or has a receiver or trustee appointed. A breach of any representation or warranty, or blocked assets due to terrorist activities, also allows for immediate termination.
Furthermore, if a developer fails to comply with any other provision of the agreement or any requirement of the Churchs Chicken system, and has received a notice of default for a similar issue within the previous 12 months, Cajun can issue a notice of termination without providing an opportunity to remedy the default. These stipulations outline the serious commitments a developer makes and the potential ramifications for failing to meet those commitments, highlighting the importance of careful planning and adherence to the agreement.