Under what conditions can a Churchs Chicken sublessee terminate the sublease following damage or destruction to the premises?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding the foregoing, if the building comprising the Premises is damaged or destroyed during the last lease year of the then Term, including any Extension Period, and the cost of restoring such damage or destruction exceeds fifty percent (50%) of the then replacement value of the building, fixtures and improvements comprising the Premises, as reasonably determined by Sublessor, exclusive of the cost of the foundation, and an Event of Default shall not have occurred and be continuing, then Sublessee shall have the right to terminate this Sublease by giving notice of such termination ("Termination Notice") to Sublessor within thirty (30) days after the occurrence of such Casualty, in which event this Lease shall be deemed terminated effective as of the later of the date (i) such Termination Notice is delivered to Sublessor, (ii) Sublessee vacates the Premises following such
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, a sublessee has specific, limited rights to terminate the sublease due to property damage. The sublessee can only terminate the sublease if the building comprising the premises is damaged or destroyed during the last lease year (including any extension period). Additionally, the cost to restore the damage or destruction must exceed 50% of the then-replacement value of the building, fixtures, and improvements, excluding the foundation cost, as reasonably determined by the sublessor. An Event of Default must also not have occurred and be continuing.
To exercise this termination right, the Churchs Chicken sublessee must provide a Termination Notice to the sublessor within 30 days after the casualty event. The termination is effective on the later of (i) the date the Termination Notice is delivered or (ii) the date the sublessee vacates the premises following the casualty.
It is important to note that, generally, a casualty event does not relieve the sublessee of their obligations under the sublease, including rent payments. The sublessee is typically responsible for restoring the premises as nearly as possible to its original condition before the casualty, regardless of insurance proceeds. This termination clause provides a specific exception under severe damage scenarios during the final year of the lease, offering a limited escape from these obligations.