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                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of April 4, 2006 by
and between Back Yard Burgers, Inc., a Delaware corporation (the "Company"), and
Lattimore M. Michael ("Chairman").

         WHEREAS, Chairman and the Company previously entered into an Executive
Employment Agreement dated April 15, 1993 (the "Employment Agreement") and a
Severance Agreement dated October 11, 2004 (the "Severance Agreement");

         WHEREAS, as of the date of this Agreement, Chairman serves as the
Chairman of the Board of Directors of the Company (the "Board") and the Chief
Executive Officer of the Company;

         WHEREAS, effective as of the Effective Date (as defined below), the
Chairman desires to resign as the Chief Executive Officer of the Company and
serve solely as the Chairman of the Board and an employee of the Company, and
the Company desires to so employ Chairman.

         NOW, THEREFORE, in consideration of the promises and the mutual
agreements contained herein, the Company and Chairman hereby agree as follows:

         SECTION 1. EMPLOYMENT.

                  (a) Chairman agrees to resign as the Chief Executive Officer
         of the Company on the Effective Date. The Company agrees to continue to
         employ Chairman as Chairman of the Board and as an employee of the
         Company, and Chairman hereby accepts such employment with the Company,
         upon the terms and conditions set forth in this Agreement, for the
         period beginning on the Effective Date and ending as provided in
         Section 4 of this Agreement (the "Employment Period"). "Effective Date"
         means date on which the Company employs a permanent Chief Executive
         Officer to replace Chairman in his role as Chief Executive Officer of
         the Company.

                  (b) The Employment Agreement and the Severance Agreement shall
         each continue in effect until the day before the Effective Date and
         shall terminate on the Effective Date and, thereafter, be of no further
         force or effect, and, thereafter, Chairman shall not be entitled to any
         severance or other further compensation, payments or benefits
         thereunder (other than unpaid salary and bonus and other benefits
         accrued to the Effective Date).

         SECTION 2. POSITION AND DUTIES.

                  (a) Commencing on the Effective Date and continuing during the
         Employment Period, Chairman shall serve as Chairman of the Company,
         subject to




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         Chairman being elected to the Board by the stockholders of the Company
         in accordance with the Company's certificate of incorporation and
         bylaws, and as an employee of the Company, or in such other capacity as
         the Board may determine. As Chairman of the Company, Chairman shall
         preside at all meetings of the Board and shareholders at which he is
         present and shall perform such other duties and have such authority as
         from time to time may be delegated or assigned to him by the Board as
         are consistent with the duties of a member of the Board and as founder
         and spokesman. Such activities may include meeting with franchisees,
         appearing at franchisee meetings and Company events, performing
         promotional activities, appearing in Company advertisements or
         promotions, and evaluating and reporting to the Board regarding the
         performance of the Chief Executive Officer/President of the Company.

                  (b) Chairman shall perform his duties and responsibilities
         hereunder to the best of his abilities in a diligent, trustworthy,
         businesslike and efficient manner. In the performance of his duties
         hereunder, Chairman shall at all times report and be subject to the
         direction of the Board and perform his duties hereunder subject to and
         in accordance with the resolutions or any other determinations of the
         Board and the certificate of incorporation and by-laws of the Company
         and applicable law.

         SECTION 3. BASE SALARY AND BENEFITS.

                  (a) Subject to the terms of this Agreement, in consideration
         of Chairman's agreements contained herein, for the period beginning the
         Effective Date, Chairman's base salary shall be $85,000 per annum
         ("Base Salary"), which shall be payable under the same schedule as
         other employees of the Company or other agreed-upon equal installments
         during the year and shall be subject to deductions for customary
         withholdings, including, without limitation, federal and state
         withholding taxes and social security taxes.

                  (b) In addition to the Base Salary, Chairman shall be entitled
         to receive during the Employment Period (i) a car allowance in the
         amount of $10,012 per annum, (ii) health insurance consistent with
         health insurance provided through the Company plans, (iii) life
         insurance premiums of $5,030 per annum, (iv) use of a cellular
         telephone, and (v) reimbursement for out-of-pocket expenses incurred at
         the request of the Board or the Chief Executive Officer of the Company.
         All grants of stock options previously made to Chairman pursuant to any
         stock option or equity incentive plan of the Company (the "Option
         Plans") shall survive in accordance with the terms of such grants.

                  (c) Chairman shall not be entitled hereunder to (a) receive
         any grants of restricted stock or stock options under the Option Plans,
         (b) additional compensation for service on the Board, (c) receive any
         bonus or participate in any bonus plan or arrangement of the Company,
         or (c) except as provided in Section 3(b) hereof, otherwise participate
         in any retirement, disability, pension, savings, insurance and other
         fringe benefits or plans of the Company.



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         SECTION 4. TERM AND TERMINATION.

                  (a) Chairman's employment hereunder shall commence on the
         Effective Date and, unless sooner terminated pursuant to this Section
         4, terminate as of the close of business on date of the Company's 2011
         annual meeting of stockholders (the "Term"); provided, that Chairman
         shall serve only as an employee of the Company, and not as Chairman of
         the Board, during any period included in the Term in which the Chairman
         has not been elected by the Company's stockholders as a director of the
         Company.

                  (b) The Employment Period, and Chairman's employment hereunder
         as Chairman and an employee of the Company, and any and all rights of
         Chairman under this Agreement, shall terminate (except as otherwise
         provided in this Section 4):

                           (i) upon the death of Chairman;

                           (ii) upon disability of Chairman (as defined in
                  Section 7(f) hereof) immediately upon notice from either party
                  to the other;

                           (iii) upon the Chairman's resignation or removal from
                  the Board;

                           (iv) upon notice from the Company to Chairman, with
                  or without Cause; and

                           (v) upon notice from Chairman to the Company.

                  (c) Upon termination of Chairman's employment hereunder as
         Chairman and an employee by the Company without Cause during the Term,
         Chairman will continue to receive an amount equal to the Base Salary
         and the other amounts payable pursuant to Section 3 hereof, less
         applicable deductions payable in accordance with standard payroll
         procedures, that Chairman otherwise would have received during the
         balance of such Term, and Chairman shall not be entitled to any further
         compensation, payments or benefits hereunder.

                  (d) Upon termination of Chairman's employment hereunder as
         Chairman and an employee (i) by the Company with Cause or as a result
         of Chairman's disability during the Term, (ii) by Chairman during the
         Term for any reason, including disability, or (iii) upon the death of
         the Chairman during the Term, or upon the Chairman's resignation from
         the Board during the Term or removal from the Board with Cause during
         the Term, in each case, the Company shall pay Chairman, within two
         weeks of such termination, amounts payable pursuant to Section 3 hereof
         earned through the termination date, and Chairman shall not be entitled
         to any further compensation, payments or benefits hereunder.

                  (e) "Cause" shall have the meaning set forth in the Company's
         bylaws for the removal of a director.

                  (f) Chairman will be deemed to be "disabled" if, for physical
         or mental reasons, Chairman is unable to perform the essential
         functions of Chairman's duties


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         under this Agreement for 90 consecutive days or 120 days during any
         twelve-month period.

         SECTION 5. NON-COMPETE. During the Employment Period Chairman will not,
directly or indirectly engage or participate in any way, as an owner, officer,
partner, member, employee, agent, independent contractor, board member or
stockholder of any entity that is competitive with the Company.

         SECTION 6. CONSIDERATION. Chairman understands and agrees that he would
not receive the monies and/or benefits specified herein but for his execution of
this Agreement and the fulfillment of the promises contained herein.

         SECTION 7. GENERAL RELEASE OF CLAIMS. In exchange for, and in
consideration of, the payments, benefits, and other commitments described above,
Chairman, for himself and for each of his heirs, executors, administrators, and
assigns, hereby fully releases, acquits, and forever discharges the Company and
each of any predecessors, successors and assigns, parent corporations,
subsidiary corporations thereof, affiliated corporations, and the officers,
directors, shareholders, partners, employees, attorneys and agents, past and
present, of each of the aforesaid entities ("Related Persons") of and from any
and all claims, liabilities, causes of action, demands to any rights, damages,
costs, attorneys' fees, expenses, and compensation whatsoever, of whatever kind
or nature, in law, equity or otherwise, whether known or unknown, vested or
contingent, suspected or unsuspected, that Chairman may now have, has ever had,
or hereafter may have relating directly or indirectly to Chairman's employment
with the Company on or prior to the date hereof or the provisions contemplated
by this Agreement including, but not limited to, claims for wages, back pay;
front pay; reinstatement; damages; or benefits. Chairman also releases any and
all claims he may have that arose prior to the date of this Agreement, and
hereby specifically waives and releases all claims, including, but not limited
to, those arising under Title VII of the Civil Rights Act of 1964, as amended,
the Civil Rights Act of 1991; the Equal Pay Act; the Americans With Disabilities
Act of 1990; the Rehabilitation Act of 1973, as amended; Sections 1981 through
1988 of Title 42 of the United States Code, as amended; the Immigration Reform
and Control Act, as amended; the Workers Adjustment and Retraining Notification
Act, as amended; the Occupational Safety and Health Act, as amended; the
Sarbanes-Oxley Act of 2002; the Consolidated Omnibus Budget Reconciliation Act
(COBRA); the Family and Medical Leave Act; the Employee Retirement Income
Security Act of 1974, as amended; the National Labor Relations Act; the Fair
Labor Standards Act; the Age Discrimination in Employment Act of 1967; and any
and all state or local statutes, ordinances, or regulations, as well as all
claims arising under federal, state, or local law involving any tort, employment
contract (express or implied), public policy, wrongful discharge, whistleblower
or any other claim. This Section 7(a) shall not apply to rights or claims that
may arise after the date of this Agreement; nor shall any provision of this
Agreement be interpreted to waive, release, or extinguish any rights that -- by
express and unequivocal terms of law -- may not under any circumstances be
waived, released, or extinguished. The Company acknowledges that it is not
currently aware of any material breach by Chairman of the terms and conditions
of the existing Employment Agreement dated April 15, 1993.

         SECTION 8. AFFIRMATIONS. Chairman represents and affirms that he has no
suits, claims, charges, complaints or demands of any kind whatsoever currently
pending against the Company


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with any local, state, or federal court or any governmental, administrative,
investigative, civil rights or other agency or board.

         SECTION 9. NO ASSIGNMENT. The Company and Chairman each represent and
warrant that no person other than the signatories hereto had or has any interest
in the matters referred to in this Agreement, that it has the sole right and
exclusive authority to execute this Agreement, and that it has not sold,
assigned, transferred, conveyed, or otherwise disposed of any claim, demand or
legal right that is the subject of this Agreement.

         SECTION 10. GOVERNING LAW AND JURISDICTION. This Agreement shall be
governed and conformed in accordance with the laws of the State of Tennessee
without regard to its conflict of laws provision. In the event Chairman or the
Company breaches any provision of this Agreement, Chairman and the Company
affirm that either may institute an action to specifically enforce any term or
terms of this Agreement.

         SECTION 11. CONDITIONS. Should Chairman ever breach any provision or
obligation under this Agreement, Chairman explicitly agrees to pay all damages
(including, but not limited to, litigation and/or defense costs, expenses, and
reasonable attorneys' fees) incurred by the Company as a result of Chairman's
breach. Nothing in this paragraph shall, or is intended to, limit or restrict
any other rights or remedies the Company may have by virtue of this Agreement or
otherwise. Should the Company ever breach any provision or obligation under this
Agreement, the Company explicitly agrees to pay all damages (including, but not
limited to, litigation and/or defense costs, expenses, and reasonable attorneys'
fees) incurred by Chairman as a result of the Company' breach. Nothing in this
paragraph shall, or is intended to, limit or restrict any other remedies
Chairman may have by virtue of this Agreement or otherwise.

         SECTION 12. NO ADMISSION OF LIABILITY. The parties hereto agree that
neither this Agreement nor the furnishing of the consideration for this
Agreement shall be deemed or construed at anytime for any purpose as an
admission by the Company or Chairman of any liability or unlawful conduct of any
kind.

         SECTION 13. HEADINGS. The headings of the provisions herein are
intended for convenient reference only, and the same shall not be, nor be deemed
to be, interpretative of the contents of such provision.

         SECTION 14. MODIFICATION OF AGREEMENT. This Agreement may not be
amended, revoked, changed, or modified in any way, except in writing executed by
all Parties. Chairman agrees not to make any claim at any time or place that
this Agreement has been verbally modified in any respect whatsoever. No waiver
of any provision of this Agreement will be valid unless it is in writing and
signed by the party against whom such waiver is charged. The parties acknowledge
that only Counsel for the Company has the authority to modify this Agreement on
behalf of the Company.

         SECTION 15. INTERPRETATION. The language of all parts of this Agreement
shall in all cases be construed as a whole, according to its fair meaning, and
not strictly for or against any of the Parties. This Agreement has been
negotiated by and between attorneys for the Parties and shall not be construed
against the "drafter" of the Agreement. If any portion or provision of this


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Agreement (including, without implication of limitation, any portion or
provision of any section of this Agreement) is determined to be illegal,
invalid, or unenforceable by any court of competent jurisdiction and cannot be
modified to be legal, valid, or enforceable, the remainder of this Agreement
shall not be affected by such determination and shall be valid and enforceable
to the fullest extent permitted by law, and said illegal, invalid, or
unenforceable portion or provision shall be deemed not to be a part of this
Agreement. In the event of a breach or threatened breach of any of the duties
and obligations of Chairman under this Agreement, the Company shall be entitled,
in addition to any other legal or equitable remedies it may have in connection
therewith (including any right to damages that the Company may suffer), to a
temporary, preliminary, and/or permanent injunction restraining such breach or
threatened breach.

         SECTION 16. BINDING NATURE OF AGREEMENT. This Agreement shall be
binding upon each of the Parties and upon their respective heirs,
administrators, representatives, executors, successors, and assigns, and shall
inure to the benefit of each party and to their respective heirs,
administrators, representatives, executors, successors, and assigns.

         SECTION 17. ENTIRE AGREEMENT. This Agreement sets forth the entire
Agreement between the parties hereto, and fully supersedes any prior obligation
of the Company to Chairman. Chairman acknowledges that he has not relied on any
representations, promises, or agreements of any kind made to him in connection
with his decision to accept this Agreement, except for those set forth in this
Agreement.

         SECTION 18. NOTICE REQUIREMENTS. Each notice ("Notice") provided for
under this Agreement, must comply with the requirements as set forth in this
paragraph. Each Notice shall be in writing and sent by facsimile or depositing
it with a nationally recognized overnight courier service that obtains receipts
(such as Federal Express or UPS Next Day Air), addressed to the appropriate
party (and marked to a particular individual's attention, if so indicated) as
hereinafter provided. Each Notice shall be effective upon being so telecopied or
deposited, but the time period in which a response to any notice must be given
or any action taken with respect thereto shall commence to run from the date of
receipt of the Notice by the addressee thereof, as evidenced by the return
receipt. Rejection or other refusal by the addressee to accept or the inability
to deliver because of a changed address of which no Notice was given shall be
deemed to be the receipt of the Notice sent. Any party shall have the right from
time to time to change the address or individual's attention to which notices to
it shall be sent by giving to the other party at least ten (10) days prior
Notice thereof. The parties' addresses for providing Notices hereunder shall be
as follows:

                  If to the Company:          Back Yard Burgers, Inc.
                                              1657 Shelby Oaks Dr. N. Ste. 105
                                              Memphis, Tennessee 38134
                                              Attn: Chief Executive Officer




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<PAGE>


                  If to Chairman:             Lattimore M. Michael

                                              ---------------------------

                                              ---------------------------



         SECTION 19. TIME TO SIGN AND RETURN AGREEMENT. Chairman acknowledges
and agrees that he first received the original of this Agreement on or before
April 4, 2006. Chairman also understands and agrees that he has been given at
least 21 calendar days from the date he first received this Agreement to obtain
the advice and counsel of the legal representative of his choice and to decide
whether to sign it. Chairman acknowledges that he has been advised and has
sought the advice of his own counsel. Chairman understands that he may sign the
Agreement at any time on or before the expiration of this 21-day period.
Chairman also understands that for seven calendar days after he signs this
Agreement he has the right to revoke it, and that this Agreement will not become
effective and enforceable until after the expiration of this seven-day period in
which he did not exercise his right of revocation. Chairman specifically
understands and agrees that any attempt by him to revoke this Agreement after
the seven-day period has expired is, or will be, ineffective. Chairman
represents and agrees that he has thoroughly discussed all aspects and effects
of this Agreement with his attorney, that he has had a reasonable time to review
the Agreement, that he fully understands all the provisions of the Agreement and
that he is voluntarily entering into this Agreement.

         SECTION 20. SELECTIVE ENFORCEMENT. The parties hereto agree that the
failure of any party to enforce or exercise any right, condition, term, or
provision of this Agreement shall not be construed as or deemed a relinquishment
or waiver thereof, and the same shall continue in full force and effect.

         CHAIRMAN IS HEREBY ADVISED THAT HE HAS A REASONABLE PERIOD OF TIME TO
REVIEW AND CONSIDER THIS AGREEMENT AND IS HEREBY ADVISED THAT HE SHOULD CONSULT
WITH AN ATTORNEY PRIOR TO THE EXECUTION OF THIS AGREEMENT.

         HAVING ELECTED TO EXECUTE THIS AGREEMENT, TO FULFILL THE PROMISES AND
TO RECEIVE THE SUMS AND BENEFITS HEREUNDER, CHAIRMAN FREELY, VOLUNTARILY AND
KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS AGREEMENT INTENDING TO
WAIVE, SETTLE, AND RELEASE ALL CLAIMS HE HAS OR MIGHT HAVE AGAINST THE COMPANY
AS OF THE DATE HEREOF.






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         ACCEPTED AND AGREED:



         By:      /s/ Lattimore M. Michael
            -----------------------------------------
                  LATTIMORE M. MICHAEL

         Date:    April 4, 2006
              ---------------------------------------













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         STATE OF TENNESSEE      )
                                 )
         COUNTY OF SHELBY        )


             BEFORE ME, the undersigned authority on this 4th day of April 2006,
personally appeared LATTIMORE M. MICHAEL, known to me to be the person whose
name is subscribed to the foregoing instrument and signed in my presence and
swore upon oath this Agreement was executed for the purposes and consideration
therein expressed.

         SUBSCRIBED AND SWORN TO BEFORE ME on this 4th day of April 2006, to
certify which witness my hand and seal of office.



                                               /s/ Dixie McConnell
                                          ----------------------------------
                                          NOTARY PUBLIC



                                                Dixie McConnell
                                          -----------------------------------
                                                (Printed Name of Notary)



         My Commission Expires:

               1/15/08
         -----------------------









                                       9

<PAGE>


         ACCEPTED AND AGREED:



         BACK YARD BURGERS, INC.



         By:      /s/ Joseph L. Weiss
            -----------------------------------------
         Name:    Joseph L. Weiss
              ---------------------------------------
         Title:   COO
               --------------------------------------


         Date:    April 4, 2006
              ---------------------------------------














                                       10


<PAGE>


         STATE OF TENNESSEE         )
                                    )
         COUNTY OF SHELBY           )


                  BEFORE ME, the undersigned authority on this 4th day of April
2006, personally appeared Joseph L. Weiss, known to me to be the person whose
name is subscribed to the foregoing instrument and signed in my presence and
swore upon oath this Agreement was executed for the purposes and consideration
therein expressed.

         SUBSCRIBED AND SWORN TO BEFORE ME on this 4th day of April 2006, to
certify which witness my hand and seal of office.



                                                     /s/ Dixie McConnell
                                              ----------------------------------
                                              NOTARY PUBLIC



                                                        Dixie McConnell
                                              ----------------------------------
                                              (Printed Name of Notary)



         My Commission Expires:



                  1/15/08
         ------------------------











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