Under what conditions can Cajun withhold consent for a Churchs Chicken franchisee to relocate their Franchised Restaurant?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- (1) Cajun hereby grants to Franchisee a license (the "Franchise") to continuously operate the Franchised Restaurant at the Franchised Location and to use the Proprietary Marks solely in the operation of the Franchised Restaurant. Franchisee shall not operate the Franchised Restaurant at any site other than the Franchised Location, and shall not relocate the Franchised Restaurant without Cajun's prior consent, which may be withheld by Cajun in its sole discretion and will be subject to the site acceptance process set forth in the Development Agreement. If Cajun approves a relocation of the Franchised Restaurant, it shall have the right to charge Franchisee for all reasonable expenses actually incurred in connection with consideration of the relocation request and Cajun may condition its approval upon the payment of a minimum royalty to Cajun during the period in which the Franchised Restaurant is not in operation. The minimum royalty will be calculated as the average weekly royalty that Franchisee owed to Cajun during the 52 weeks before the closure of the Restaurant (or any such lesser period if the Restaurant was not open 52 weeks) multiplied by the number of weeks or partial weeks that the Restaurant is not in operation.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, Cajun, as the franchisor, has the authority to withhold consent for a franchisee to relocate their Churchs Chicken restaurant. The document specifies that Cajun may withhold this consent at its sole discretion. This means that Cajun is not obligated to approve a relocation request, and they do not necessarily need to provide a specific reason for denying the request.
Furthermore, even if Cajun approves a relocation, they have the right to charge the franchisee for all reasonable expenses incurred while considering the relocation request. Additionally, Cajun can make its approval contingent upon the franchisee paying a minimum royalty during the period when the restaurant is not operational due to the relocation. This minimum royalty is calculated based on the average weekly royalty the franchisee owed during the 52 weeks prior to the restaurant's closure (or a shorter period if the restaurant was not open for 52 weeks), multiplied by the number of weeks the restaurant is not in operation.
This policy has significant implications for prospective Churchs Chicken franchisees. It highlights the importance of carefully selecting the initial restaurant location, as relocation may not be easily achievable. The potential costs associated with relocation, including expenses incurred during the approval process and minimum royalty payments during the downtime, should also be carefully considered. Franchisees should discuss potential relocation scenarios with Cajun before signing the franchise agreement to fully understand the franchisor's expectations and potential financial burdens.