Under what conditions can Cajun withhold consent for a Churchs Chicken franchisee to relocate their 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, the franchisor, has the authority to withhold consent for a franchisee to relocate their Churchs Chicken restaurant. This consent can be withheld at Cajun's "sole discretion." This means that Churchs Chicken franchisees do not have an explicit contractual right to relocate their business.
If a Churchs Chicken franchisee wants to move locations, they must seek approval from Cajun. Even if Cajun approves the relocation, they have the right to charge the franchisee for any expenses incurred while considering the relocation request. Additionally, Cajun can mandate that the franchisee pay a minimum royalty during the period when the restaurant is closed for relocation. This minimum royalty is calculated based on the average weekly royalty paid by the franchisee during the 52 weeks prior to closure (or a shorter period if the restaurant was not open for a full 52 weeks), multiplied by the number of weeks the restaurant is not operating.
This policy has significant implications for prospective Churchs Chicken franchisees. It highlights the importance of selecting an initial location carefully, as relocation may not be easily achievable and could incur additional costs. The franchisee bears the risk of potentially losing revenue during the relocation period while still being obligated to pay minimum royalties. This clause gives Churchs Chicken significant control over the location of its franchises and protects its strategic interests.