Popeyes Chicken sues Church's Chicken |
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Published
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Wed, 28 Feb 2007 22:25
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ATLANTA (AP) - AFC Enterprises Inc., franchisor and operator of the Popeyes Chicken & Biscuits fast-food chain, on Wednesday said it sued rival Church's Chicken and a former Popeyes franchisee for $20 million in damages.In the suit, AFC claims Church's Chicken and former franchise group CVI Co. colluded to breach Popeyes' franchise, development and guaranty agreements with CVI.AFC, which owned both Popeye's and Church's for about 12 years through 2004, said Church's bought all 10 of CVI's Popeyes' restaurants and converted most of them to the Church's Chicken brand.The company said the sale and conversion of the restaurants, which are in southern Texas, violates its franchise agreement with CVI. The terms of the contract bar CVI from changing the restaurants' names or brands or selling the business to a competitor without AFC's written consent.Furthermore, AFC alleges Church's had direct knowledge the restaurants they purchased, and have begun converting, were being operated under franchise agreements with Popeyes. AFC believes Church's had 'full knowledge of the terms of the franchise agreements prohibiting the sale.'Church's Chicken is owned by private equity firm Arcapita Inc., a subsidiary of the First Islamic Bank of Bahrain. An Arcapita representative could not be immediately reached for comment.Shares of AFC Enterprises rose 4 cents to close at $17.19 on the Nasdaq Stock Market.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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