Under what conditions can a Churchs Chicken franchisee grant a security interest in the franchised restaurant without Cajun's approval?

According to Churchs Chicken's 2025 Franchise Disclosure Document, a franchisee cannot grant a security interest in the franchised restaurant, the franchised location, or the assets of the franchisee without prior approval from Cajun. However, Cajun's approval will not be unreasonably withheld. This means that while Churchs Chicken franchisees need to seek permission before using their restaurant as collateral, Cajun cannot arbitrarily deny such requests.

This requirement protects Cajun's interests by ensuring that the franchisee's financial dealings do not jeopardize the Churchs Chicken brand or the operation of the restaurant. By retaining approval rights, Cajun can assess the risk associated with the security interest and ensure that the terms of the agreement are not detrimental to the franchise system.

For a prospective Churchs Chicken franchisee, this means that obtaining financing that involves using the restaurant as collateral will require transparency and communication with Cajun. Franchisees should be prepared to provide Cajun with detailed information about the loan and the security interest to facilitate the approval process. Understanding the conditions under which Cajun will grant approval is crucial for franchisees planning to seek such financing.