Upon termination or expiration of the Development Agreement, does a Churchs Chicken developer retain the right to develop or open new franchised restaurants in the Development Area?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
efault is not by Developer, Developer is given notice of the default and 30 days to cure said default.
- (11) There is a breach by Developer of any representation or warranty set forth in Section 25.G-H.
- (12) The assets, property, or interests of Developer, any Continuity Group member or any guarantor are blocked under any law, ordinance, or regulation relating to terrorist activities, or Developer, any Continuity Group member or any guarantor otherwise violate any such law, ordinance, or regulation.
- (13) Developer fails or refuses to comply with any other provision of this Agreement or any requirement of the System and does not correct the failure or refusal within 30 days (10 days for monetary defaults) after receiving notice of default. If Developer has received a notice of default pursuant to this Section 15.A.(13) within the previous 12 months, Cajun shall be entitled to send Developer a notice of termination upon Developer's next default under this Section 15.A.(13) within that 12-month period without providing Developer an opportunity to remedy that default.
- B. Action Other Than Termination. If Cajun hasthe right to terminate this Agreement under Section 15.A., then Cajun may take any one or more of the following actions prior to or in lieu of termination:
- (1) reduce the number of Franchised Restaurants which Developer is required to establish pursuant to Section 3.A. of this Agreement;
- (2) reduce the size of the Development Area;
- (3) withhold evaluation or acceptance of site proposal packages and refuse to permit the opening of any Franchised Restaurant then under construction or not otherwise not ready to commence operations, pending satisfactory cure of any such default;
- (4) accelerate the Development Schedule; and
- (5) pursue any other remedies available under this Agreement (including termination) or at law or in equity.
16. OBLIGATIONS ON TERMINATION OR EXPIRATION
A. Upon termination or expiration of this Agreement:
- (1) Developer shall have no further right to develop or open Franchised Restaurants in the Development Area. Termination or expiration of this Agreement shall not affect Developer's right to continue to operate Franchised Restaurantsthat were open and operating pursuant to a Franchise Agreement as of the date this Agreement terminated or expired.
- (2) The rights granted Developer in the Development Area shall terminate and Cajun shall have the right to operate or license others to operate restaurants identified in whole or in part by the names and marks "Church's", "Church's Chicken" and "Church's Texas Chicken" anywhere in the Development Area.
- (3) Developer promptly shall return to Cajun the Manual, any copies of the Manual and all other materials and information furnished by Cajun or its affiliates, except materials and information furnished with respect to a Franchised Restaurant which is open and operating pursuant to an effective franchise agreement.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, upon termination or expiration of the Development Agreement, the developer loses the right to develop or open new franchised restaurants in the Development Area. Specifically, the rights granted to the developer in the Development Area terminate, and Churchs Chicken has the right to operate or license others to operate restaurants with the Churchs Chicken name in that area. However, the termination or expiration of the Development Agreement does not affect the developer's right to continue operating franchised restaurants that were already open and operating under a Franchise Agreement at the time of termination or expiration.
This means that while a developer can continue to run existing Churchs Chicken restaurants under their respective franchise agreements, they cannot expand their footprint within the Development Area after the Development Agreement ends. Churchs Chicken regains control over the Development Area and can choose to operate or license new locations to others. This is a standard provision in development agreements to ensure the franchisor can control future growth and market development.
Furthermore, the developer is subject to certain restrictions following the termination or expiration of the Development Agreement. For a period of two years, the developer cannot have an ownership interest in any restaurant business (other than a Churchs Chicken restaurant) that specializes in the sale of fried chicken within the Development Area or within a 5-mile radius of any existing or developing Churchs Chicken restaurant. However, these restrictions do not apply to the developer's existing restaurant or foodservice operations, if any, which are identified in Schedule 2, nor shall they apply to other restaurants operated by Developer that are franchised by Cajun or its affiliates.
Churchs Chicken also retains the right to modify these covenants at its discretion, providing immediate notice to the developer. This clause ensures Churchs Chicken can adapt the non-compete restrictions as needed to protect its business interests. A prospective franchisee should carefully consider these limitations and how they might impact their future business opportunities before entering into a Development Agreement with Churchs Chicken.