Under what condition related to other restaurants franchised by Cajun or its affiliates, must a Churchs Chicken franchisee execute a cross-guarantee?

According to the 2025 Churchs Chicken Franchise Disclosure Document, a franchisee must provide a cross-guarantee under specific circumstances related to other restaurants. If a franchisee, any guarantor, or any parent, subsidiary, or affiliate of the franchisee holds an interest in other restaurants that are also franchised by Cajun or its affiliates, then the party who owns that interest is required to execute a cross-guarantee. This cross-guarantee would be in favor of Cajun and its affiliates, ensuring the payment of all obligations for all such restaurants.

This requirement can be waived by Churchs Chicken (Cajun) at its sole discretion, indicating that there might be circumstances where a cross-guarantee is not necessary even if the franchisee has interests in other franchised restaurants. However, unless explicitly waived in writing by Cajun, the cross-guarantee is a mandatory condition.

For a prospective Churchs Chicken franchisee, this means that if they or their related entities have ownership stakes in other franchise restaurants within the Cajun system (or its affiliates), they should anticipate being asked to provide a cross-guarantee. This guarantee would essentially tie the financial performance of all the franchised restaurants together, increasing the financial risk for the franchisee and related parties. It is important to clarify with Churchs Chicken whether a cross-guarantee will be required and under what specific conditions it might be waived.