Browns_Chicken 2025 Franchise FAQ - FDD Ninja

Question 1

What is the estimated total initial investment range for a Browns Chicken franchise?

Accepted Answer

[Item 7: ESTIMATED INITIAL INVESTMENT]

| Expenditures | Range | When Due | To Whom Payments Are to be Made |
|---|---|---|---|
| Franchise Fee | $25,000 | $15,000 when you sign the Preliminary Agreement, the balance when upon store opening. | Brown |
| Rent & Security | $8,000 to | As negotiated with Landlord | Landlord |
| Deposit | $40,000 |  |  |
| Buildout of | $150,000 to | As incurred | Contractors, vendors |
| Restaurant | $600,000 |  |  |
| Buildout of Video | $0 - $2,000 | As incurred | Contractor |
| Gaming Area |  |  |  |
| Equipment Costs | $150,000 to | Time of purchase | Brown, vendors |
| (includes signage) | $500,000 |  |  |
| Inventory for initial 2 | $8,000 to | Time of purchase | Vendors |
| weeks | $20,000 |  |  |
| Additional Funds (3 month estimate) | $25,000 to $52,000 | As incurred | Brown’s insurance companies, vendors, utilities, governmental agencies, etc. |
| ESTIMATED | $366,000 to |  |  |
| TOTAL: | $1,239,000 |  |  |

---
[Item 7: ESTIMATED INITIAL INVESTMENT]

| Type of Expenditures | Range | When Due | To Whom Payments Are to be Made |
|---|---|---|---|
| Franchise Fee | $25,000 | $15,000 when you sign the Preliminary Agreement, the balance when upon store opening. | Brown |
| Vacant Real Estate | $150,000 to $1,000,000 | Time of purchase | Seller of Real Estate |
| Building – New | $250,000 to $750,000 | Time of construction | Contractors, vendors |
| Equipment Costs | $150,000 to | Time of purchase | Brown, vendors |
| (includes signage) | $500,000 |  |  |
| Build-Out for Video | $0 - $2,000 | Time of construction | Contractor |
| Gaming Area |  |  |  |
| Inventory for initial 2 | $8,000 to | Time of purchase | Vendors |
| weeks | $20,000 |  |  |
| Additional Funds (3 month estimate) | $25,000 to $52,000 | As incurred | Brown’s insurance companies, vendors, utilities, governmental agencies, etc. |
| ESTIMATED | $608,000 to |  |  |
| TOTAL: | $2,349,000 |  |  |

---
[Item 7: ESTIMATED INITIAL INVESTMENT]

| Expenditures | Range | When Due | To Whom Payments Are to be Made |
|---|---|---|---|
| Franchise Fee | $25,000 | $15,000 when you sign the Preliminary Agreement, the balance when upon store opening. | Brown |
| Real Estate (land & | $200,000 to | Time of purchase | Seller of Real Estate |
| Shell Building) | $1,500,000 |  |  |
| Remodeling Costs | $150,000 to $600,000 | As incurred | Contractors, vendors |
| Build-Out for Video | $0 - $2,000 | Time of construction | Contractor |
| Gaming Area |  |  |  |
| Equipment Costs | $150,000 to | Time of purchase | Brown, vendors |
| (includes signage) | $500,000 |  |  |
| Inventory for initial 2 | $8,000 to | Time of purchase | Vendors |
| weeks | $20,000 |  |  |
| Additional Funds (3 month estimate) | $25,000 to $52,000 | As incurred | Brown’s insurance companies, vendors, utilities, governmental agencies, etc. |
| ESTIMATED | $558,000 to |  |  |
| TOTAL: | $2,699,000 |  |  |

---
[Item 7: ESTIMATED INITIAL INVESTMENT]

| Expenditures | Range | When Due | To Whom Payments Are to be Made |
|---|---|---|---|
| Franchise Fee | $25,000 | $15,000 when you sign the Preliminary Agreement, the balance when upon store opening. | Brown |
| Remodeling Costs | $150,000 to $600,000 | As incurred | Contractors, vendors |
| Build-Out for Video | $0 – $2,000 | As incurred | Contractor |
| Gaming Area |  |  |  |
| Equipment Costs | $150,000 to | Time of purchase | Brown, vendors |
| (including signage) | $500,000 |  |  |
| Inventory for initial 2 | $8,000 to | Time of purchase | Vendors |
| weeks | $20,000 |  |  |
| Additional Funds (3 month estimate) | $25,000 to $52,000 | As incurred | Brown’s insurance companies, vendors, utilities, governmental agencies, etc. |
| ESTIMATED | $358,000 to |  |  |
| TOTAL: | $1,199,000 |  |  |

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 16–18)

Question 2

What is the low end of the estimated total initial investment for a Browns Chicken franchise?

Accepted Answer

[Item 7: ESTIMATED INITIAL INVESTMENT]

| Expenditures | Range | When Due | To Whom Payments Are to be Made |
|---|---|---|---|
| Franchise Fee | $25,000 | $15,000 when you sign the Preliminary Agreement, the balance when upon store opening. | Brown |
| Rent & Security | $8,000 to |
As negotiated with Landlord | Landlord |
| Deposit | $40,000 |  |  |
| Buildout of |
$150,000 to | As incurred | Contractors, vendors |
| Restaurant | $600,000 |  |  |
| Buildout of Video | $0 - $2,000 | As incurred | Contractor |
| Gaming Area |  |  |  |
| Equipment Costs | $150,000 to | Time of purchase | Brown, vendors |
| (includes signage) | $500,000 |  |  |
| Inventory for initial 2 | $8,000 to | Time of purchase | Vendors |
| weeks | $20,000 |  |  |
| Additional Funds (3 month estimate) | $25,000 to $52,000 | As incurred | Brown’s insurance companies, vendors, utilities, governmental agencies, etc. |
| ESTIMATED | $366,000 to |  |  |
| TOTAL: | $1,239,000 |  |  |

---
[Item 7: ESTIMATED INITIAL INVESTMENT]

| Type of Expenditures | Range | When Due | To Whom Payments Are to be Made |
|---|---|---|---|
| Franchise Fee | $25,000 | $15,000 when you sign the Preliminary Agreement, the balance when upon store opening. | Brown |
| Vacant Real Estate | $150,000 to $1,000,000 | Time of purchase | Seller of Real Estate |
| Building – New | $250,000 to $750,000 | Time of construction | Contractors, vendors |
| Equipment Costs | $150,000 to | Time of purchase | Brown, vendors |
| (includes signage) | $500,000 |  |  |
| Build-Out for Video | $0 - $2,000 | Time of construction | Contractor |
| Gaming Area |  |  |  |
| Inventory for initial 2 | $8,000 to | Time of purchase | Vendors |
| weeks | $20,000 |  |  |
| Additional Funds (3 month estimate) | $25,000 to $52,000 | As incurred | Brown’s insurance companies, vendors, utilities, governmental agencies, etc. |
| ESTIMATED | $608,000 to |  |  |
| TOTAL: | $2,349,000 |  |  |

---
[Item 7: ESTIMATED INITIAL INVESTMENT]

| Expenditures | Range | When Due | To Whom Payments Are to be Made |
|---|---|---|---|
| Franchise Fee | $25,000 | $15,000 when you sign the Preliminary Agreement, the balance when upon store opening. | Brown |
| Real Estate (land & |
$200,000 to | Time of purchase | Seller of Real Estate |
| Shell Building) | $1,500,000 |  |  |
| Remodeling Costs | $150,000 to $600,000 | As incurred | Contractors, vendors |
| Build-Out for Video | $0 - $2,000 | Time of construction | Contractor |
| Gaming Area |  |  |  |
| Equipment Costs | $150,000 to | Time of purchase | Brown, vendors |
| (includes signage) | $500,000 |  |  |
| Inventory for initial 2 | $8,000 to | Time of purchase | Vendors |
| weeks | $20,000 |  |  |
| Additional Funds (3 month estimate) | $25,000 to $52,000 | As incurred | Brown’s insurance companies, vendors, utilities, governmental agencies, etc. |
| ESTIMATED | $558,000 to |  |  |
| TOTAL: | $2,699,000 |  |  |

---
[Item 7: ESTIMATED INITIAL INVESTMENT]

| Expenditures | Range | When Due | To Whom Payments Are to be Made |
|---|---|---|---|
| Franchise Fee | $25,000 | $15,000 when you sign the Preliminary Agreement, the balance when upon store opening. | Brown |
| Remodeling Costs | $150,000 to $600,000 | As incurred | Contractors, vendors |
| Build-Out for Video | $0 – $2,000 | As incurred | Contractor |
| Gaming Area |  |  |  |
| Equipment Costs | $150,000 to | Time of purchase | Brown, vendors |
| (including signage) | $500,000 |  |  |
| Inventory for initial 2 | $8,000 to | Time of purchase | Vendors |
| weeks | $20,000 |  |  |
| Additional Funds (3 month estimate) | $25,000 to $52,000 | As incurred | Brown’s insurance companies, vendors, utilities, governmental agencies, etc. |
| ESTIMATED | $358,000 to |  |  |
| TOTAL: | $1,199,000 |  |  |

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 16–18)

Question 3

What was the total number of Browns Chicken outlets opened in Illinois during 2024?

Accepted Answer

| Col. 1 State | Col. 2 Year | Col. 3 Outlets at Start of Year | Col. 4 Outlets Opened | Col. 5 Terminations | Col. 6 Non- Renewals | Col. 7 Reacquired by Franchisor | Col. 8 Ceased Operations Other Reasons | Col. 9 Outlets at End of the Year |
|---|---|---|---|---|---|---|---|---|
| Illinois | 2022 | 21 | 0 | 0 | 0 | 0 | 0 | 21 |
|  | 2023 | 21 | 0 | 0 | 0 | 0 | 0 | 21 |
|  | 2024 | 21 | 1 | 0 | 0 | 0 | 2 | 20 |
| Totals | 2022 | 21 | 0 | 0 | 0 | 0 | 0 | 21 |
|  | 2023 | 21 | 0 | 0 | 0 | 0 | 0 | 21 |
|  | 2024 | 21 | 1 | 0 | 0 | 0 | 2 | 20 |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 40–42)

Question 4

How does the Browns Chicken advertising fee in Item 6 contribute to the advertising fund described in Item 11?

Accepted Answer

nally.*

#### **Item 6 OTHER FEES**

| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee on food sales1 | 5% of Gross Sales2 subject to modification as provided below. | Weekly | You must pay by automatic bank draft. |
| Video Gaming Royalty Fee | 10% of gross sales from Video Gaming revenue. | Weekly | You must pay by automatic bank draft.

Question 5

How does the Browns Chicken advertising fee percentage in Item 6 relate to the advertising fund mentioned in Item 11?

Accepted Answer

| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee on food sales1 | 5% of Gross Sales2 subject to modification as provided below. | Weekly | You must pay by automatic bank draft. |
| Video Gaming Royalty Fee | 10% of gross sales from Video Gaming revenue. | Weekly | You must pay by automatic bank draft. |
| Advertising1 | 4% of Gross Sales2 | Weekly | You must pay by automatic bank draft. See Item 11 regarding the Advertising Fund. |
| Advertising from Video Gaming Sales | 4% of gross sales from Video Gaming | Weekly | You must pay by automatic bank draft. See Item 11 regarding the Advertising Fund. |
| Additional Training for Franchisee | As Brown determines from time to time. Will include reimbursement of Brown's expenses. | At the time such training is provided. | See Item 11. |
| Audit | Cost of audit including reimbursement of all of Brown's expenses. | At the time of audit. | If you do not provide reports or other information as required and it is necessary to inspect or audit your books and records, or if you understate Gross Sales by more than 2%, you must pay all audit costs including attorneys' and accountants' fees. |

Brown will maintain and administer an advertising fund (the "Advertising Fund") for such advertising as Brown may deem necessary or appropriate, in its sole discretion (Paragraph A of Section 11 of the Franchise Agreement).

The Franchise Agreement requires you to pay to the Advertising Fund 4% of your Gross Sales. You must pay Brown the Advertising Fund by electronic transfer or automatic bank draft. You must establish an account at a bank acceptable to Brown, execute all documents required by said bank and Brown's bank to effect such transfers, and pay all fees and charges assessed by said banks for such transfers.

Currently, the advertising contribution required is 4% for BROWN'S Stores. Generally, the Advertising Fund does not pay for radio and television advertising programs in a metropolitan or regional area unless the advertising contributions received from BROWN'S Stores in that area can reasonably support such advertising programs.

Brown will from time to time with the assistance of a local advertising agency, formulate, develop, produce and conduct regional advertising and promotion programs in such form and media as Brown determines, in its sole discretion, to be most effective.

The Advertising Fund will furnish Franchisee with approved advertising materials at its direct cost of producing such advertising materials.

The Advertising Fund is intended to maximize recognition of the Marks and patronage of BROWN'S Stores. Although Brown will endeavor to utilize the Advertising Fund to develop advertising and marketing materials and to place advertising in a manner that will benefit all BROWN'S Stores, Brown undertakes no obligation to ensure that expenditures by the Advertising Fund in or affecting any geographic area are proportionate or equivalent to contributions to the Advertising Fund by BROWN'S Stores operating in that geographic area or that any BROWN's Store will benefit directly or in proportion to its contribution to the Advertising Fund from the development of advertising and marketing materials or the placement of advertising. Except as expressly provided in the Franchise Agreement, Brown assumes no direct or indirect liability or obligation to Franchisee with respect to the maintenance, direction, or administration of the Advertising Fund. Brown has no fiduciary obligation to you or any other BROWN'S Store in connection with the establishment of the Advertising Fund or the collection, control or administration of monies paid into the Advertising Fund.

We will not use Advertising Fund contributions to create or place any advertisement that is principally a solicitation for new franchises, but we may include in all advertising prepared from Advertising Fund contributions (including Internet advertising) information concerning franchise opportunities, and a portion of Advertising Fund contributions may be used to create and maintain one or more interior pages on our website devoted to advertising franchise opportunities and identifying and screening requirements and applications submitted by franchise candidates.

Question 6

What was the difference in the amount of interest Browns Chicken paid between the year ended December 31, 2023, and the year ended December 31, 2024?

Accepted Answer

Flows, cash equivalents include time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

| During the Year Ended December 31, 2024, | \$  |
|------------------------------------------|-----|
| The Company Paid Interest of             | 12  |
| During the Year Ended December 31, 2024, | \$  |
| The Company Paid Income Taxes of         | 0   |
| During the Year

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)

Question 7

How does the Browns Chicken exclusive territory described in Item 12 relate to the site selection obligations outlined in Item 9?

Accepted Answer

[Item 12: TERRITORY]

#### **Item 12 TERRITORY**

Under the Franchise Agreement Brown grants you the right to operate a BROWN'S Store at a specific location. You will receive an exclusive territory (the "Territory") that will consist of the geographic area that is within a 5-mile radius (as the crow flies) of your Store, unless you are

located in a shopping mall food court in which event you will not receive an exclusive territory. The site of your Store will be inserted in the Franchise Agreement before you sign it, unless the site is not determined when you sign the Franchise Agreement. Except as described below, if you are in full compliance with the Franchise Agreement, Brown will not operate or grant a franchise for the operation of a BROWN's Store within the Territory.

The territorial protection granted under the Franchise Agreement is not dependent upon any sales achievement or any other contingency.

#### **Location and Relocation of Store.**

The Franchise Agreement provides that you may operate the Store only at the location and on the Premises or a substitute location and/or premises subsequently approved by Brown. If your lease for the Premises expires or terminates without your fault, or if the Premises is destroyed, condemned or otherwise rendered unusable, or if in the judgment of Brown and you there is a change in character of the location of the Store sufficiently detrimental to its business potential to warrant its relocation, Brown will grant permission for relocation of the Store to a location and premises approved by Brown in its sole discretion. Any such relocation will be at your sole expense. So long as your substitute location is open and operating within 18 months of the closing of the Store at the Premises, and such substitute location is owned and operated by you or your immediate family members, Brown will consider such relocation to be under the same Franchise Agreement. Otherwise, Brown reserves the right to require you to enter into a new Franchise Agreement and to pay an additional initial franchise fee upon relocation.

Except as limited by your Franchise Agreement, Brown retains all rights with respect to BROWN's Stores, the Marks, and the sale of goods and services including the right to operate or grant to others the right to operate BROWN'S Stores anywhere outside the Territory regardless of its proximity to your Store and on such terms as we deem appropriate.

BROWN (on behalf of itself and its affiliates) retains the right, in its sole discretion:

- (1) to use other channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct marketing sales, to make sales within the Territory using our principal trademarks;
- (2) to use other channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct marketing sales, to make sales within the Territory under trademarks different from the ones you will use under the franchise agreement.
- (3) You will receive no compensation for such sales in the Territory by BROWN.
- (4) to acquire or be acquired by a company establishing businesses identical or similar to the Store, even if the other business operates, franchises, and/or licenses competitive businesses anywhere, including in close proximity to the Store.

As a quality and service control, Brown policy will permit you to deliver products only if such products can be delivered to the customer within 45 minutes of completion of the frying process and within 20 minutes of leaving the Store.

You may not solicit or accept orders from consumers outside your territory, except under our centralized catering ordering system. You may not use alternative channels of distribution (including use of a toll-free number, catalog, telemarketing, web site, or the Internet, or any other computer on-line service) to make sales anywhere, including outside your territory. You may not utilize Third-Party Delivery Services, except through the applicable Third-Party Delivery Service group account established and controlled by Brown, of which Brown designates.

We do not operate, franchise or have plans to operate or franchise a business under a different trademark, which business sells or will sell goods or services similar to those you will offer.

*The remainder of this page is left blank intentionally.*

Question 8

What are the Browns Chicken franchisee's obligations regarding equipment, fixtures, furniture, and signs, as described in Item 8, and how does this relate to the franchisor's assistance in Item 11?

Accepted Answer

any such modifications become necessary and will not violate any applicable ordinance, building code, zoning code, permit, or lease requirement or restriction.

#### **5. EQUIPMENT, FIXTURES, FURNITURE AND SIGNS.**

Franchisee agrees to use in the operation of the Store only those brands, types and/or models of equipment for the preparation, dispensing, storage, display and delivery of food and beverages, cash registers, fax machine, lap-top computer, and other equipment, fixtures, furniture, and signs that Brown has approved as meeting its specifications and standards.

Brown's specifications and standards may include minimum standards for design, appearance, function, performance, serviceability and warranties. Franchisee may purchase or lease approved brands, types and/or models of equipment, fixtures, furniture, and signs from any source. If Franchisee proposes to purchase or lease any brand, type and/or model of equipment, fixture, furniture, or sign not then approved by Brown, Franchisee shall first notify Brown in writing and shall submit to Brown upon its request sufficient specifications, photographs, drawings and/or other information or samples for a determination by Brown of whether such brand, type and/or model of equipment, fixture, furniture or sign meets its specifications and standards. Brown shall notify Franchisee within a reasonable time whether it approves such brand, type and/or model of equipment, fixture, furniture, or sign. No vending machines, unapproved newspapers or periodicals, juke boxes or other music producing machines, gum or candy machines, games, pinball machines or other mechanical devices (including pay telephones and cigarette vending machines) shall be installed or operated at the Store without Brown's prior written consent.

#### **6. LOCATION AND RELOCATION OF STORE**.

- A. **Location.** The Franchise is granted for, and Franchisee may operate the Store only at, the location and the Premises herein identified or a substitute location and/or the Premises hereafter approved by Brown. Franchisee acknowledges that Franchisee has independently evaluated the location of the Store prior to the execution of this Franchise Agreement, including the demographic characteristics of the area in which the Store is located.
- B. **Relocation.** If Franchisee's lease for the Premises expires or terminates without fault of Franchisee, or if the Premises is damaged, condemned or otherwise rendered unusable, or if, in the judgment of Brown and Franchisee, there is a change in character of the location of the Store sufficiently detrimental to its business potential to warrant its relocation, Brown will grant permission for relocation of the Store to a location and premises approved by Brown, in its sole discretion. Any such relocation shall be at Franchisee's sole expense. Brown shall have the right to charge Franchisee for services Brown renders to Franchisee in connection with such relocation. Brown shall also have the right to require Franchisee to upgrade the relocated Store to conform to Brown's then current image, standards, and specifications for construction and equipment for all new BROWN's Stores.

Question 9

What are the Browns Chicken franchisee's obligations regarding site selection and acquisition/lease (Item 9) and how does this relate to the territory granted in Item 12?

Accepted Answer

ese agreements and in other items of this disclosure document.**

| Obligation | Section In Agreement | Item in Franchise Disclosure Document |
|---|---|---|
| (a) Site selection and acquisition/lease | 4A, 4B, 4C and 6 of the Franchise Agreement;

Question 10

What are the Browns Chicken franchisee's obligations regarding site selection (Item 9) and how does the 5-mile radius territory (Item 12) impact those obligations?

Accepted Answer

Under the Franchise Agreement Brown grants you the right to operate a BROWN'S Store at a specific location. You will receive an exclusive territory (the "Territory") that will consist of the geographic area that is within a 5-mile radius (as the crow flies) of your Store, unless you are

located in a shopping mall food court in which event you will not receive an exclusive territory. The site of your Store will be inserted in the Franchise Agreement before you sign it, unless the site is not determined when you sign the Franchise Agreement. Except as described below, if you are in full compliance with the Franchise Agreement, Brown will not operate or grant a franchise for the operation of a BROWN's Store within the Territory.

The territorial protection granted under the Franchise Agreement is not dependent upon any sales achievement or any other contingency.

#### **Location and Relocation of Store.**

The Franchise Agreement provides that you may operate the Store only at the location and on the Premises or a substitute location and/or premises subsequently approved by Brown. If your lease for the Premises expires or terminates without your fault, or if the Premises is destroyed, condemned or otherwise rendered unusable, or if in the judgment of Brown and you there is a change in character of the location of the Store sufficiently detrimental to its business potential to warrant its relocation, Brown will grant permission for relocation of the Store to a location and premises approved by Brown in its sole discretion. Any such relocation will be at your sole expense. So long as your substitute location is open and operating within 18 months of the closing of the Store at the Premises, and such substitute location is owned and operated by you or your immediate family members, Brown will consider such relocation to be under the same Franchise Agreement. Otherwise, Brown reserves the right to require you to enter into a new Franchise Agreement and to pay an additional initial franchise fee upon relocation.

Except as limited by your Franchise Agreement, Brown retains all rights with respect to BROWN's Stores, the Marks, and the sale of goods and services including the right to operate or grant to others the right to operate BROWN'S Stores anywhere outside the Territory regardless of its proximity to your Store and on such terms as we deem appropriate.

Question 11

What are the Browns Chicken franchisee's obligations regarding site selection (Item 9) and how does the exclusive territory (Item 12) impact those obligations?

Accepted Answer

| Obligation | Section In Agreement | Item in Franchise Disclosure Document |
|---|---|---|
| (a) Site selection and acquisition/lease | 4A, 4B, 4C and 6 of the Franchise Agreement; Standard Sublease (Exhibit G to the Franchise Disclosure Document) | Items 1, 6, 7, 8, 11 and 12 |

Under the Franchise Agreement Brown grants you the right to operate a BROWN'S Store at a specific location. You will receive an exclusive territory (the "Territory") that will consist of the geographic area that is within a 5-mile radius (as the crow flies) of your Store, unless you are

located in a shopping mall food court in which event you will not receive an exclusive territory. The site of your Store will be inserted in the Franchise Agreement before you sign it, unless the site is not determined when you sign the Franchise Agreement. Except as described below, if you are in full compliance with the Franchise Agreement, Brown will not operate or grant a franchise for the operation of a BROWN's Store within the Territory.

The territorial protection granted under the Franchise Agreement is not dependent upon any sales achievement or any other contingency.

The Franchise Agreement provides that you may operate the Store only at the location and on the Premises or a substitute location and/or premises subsequently approved by Brown. If your lease for the Premises expires or terminates without your fault, or if the Premises is destroyed, condemned or otherwise rendered unusable, or if in the judgment of Brown and you there is a change in character of the location of the Store sufficiently detrimental to its business potential to warrant its relocation, Brown will grant permission for relocation of the Store to a location and premises approved by Brown in its sole discretion. Any such relocation will be at your sole expense. So long as your substitute location is open and operating within 18 months of the closing of the Store at the Premises, and such substitute location is owned and operated by you or your immediate family members, Brown will consider such relocation to be under the same Franchise Agreement. Otherwise, Brown reserves the right to require you to enter into a new Franchise Agreement and to pay an additional initial franchise fee upon relocation.

Franchisee's execution of a lease for a site for the Store shall constitute acceptance by Franchisee of such site and location and of the terms of such lease, sublease or purchase.

Brown's approval of the lease or sublease does not constitute a warranty or representation of any kind, express or implied, as to its fairness, suitability or profitability or as to Franchisee's ability to comply with its terms.

Question 12

What are the Browns Chicken franchisee's obligations regarding site selection (Item 9) and how does the exclusive territory (Item 12) affect those obligations?

Accepted Answer

| Obligation | Section In Agreement | Item in Franchise Disclosure Document |
|---|---|---|
| (a) Site selection and acquisition/lease | 4A, 4B, 4C and 6 of the Franchise Agreement; Standard Sublease (Exhibit G to the Franchise Disclosure Document) | Items 1, 6, 7, 8, 11 and 12 |

Under the Franchise Agreement Brown grants you the right to operate a BROWN'S Store at a specific location. You will receive an exclusive territory (the "Territory") that will consist of the geographic area that is within a 5-mile radius (as the crow flies) of your Store, unless you are

located in a shopping mall food court in which event you will not receive an exclusive territory. The site of your Store will be inserted in the Franchise Agreement before you sign it, unless the site is not determined when you sign the Franchise Agreement. Except as described below, if you are in full compliance with the Franchise Agreement, Brown will not operate or grant a franchise for the operation of a BROWN's Store within the Territory.

Except as limited by your Franchise Agreement, Brown retains all rights with respect to BROWN's Stores, the Marks, and the sale of goods and services including the right to operate or grant to others the right to operate BROWN'S Stores anywhere outside the Territory regardless of its proximity to your Store and on such terms as we deem appropriate.

Franchisee may lease, sublease from Brown, or purchase the Premises for the Store. In the event Franchisee leases the Premises, the lease for the Premises shall provide that: (1) Brown shall receive notice from the landlord of any default by Franchisee not less than ten (10) days prior to the commencement of any action to evict Franchisee from the Premises; (2) Brown shall have, at its option, ten (10) days after receipt of notice to cure such default and be substituted for Franchisee as lessee under the lease; and (3) the premises shall be used only for a BROWN Store. The lease for the Premises shall provide further for its assignment to Brown, at Brown's option, upon the termination of this Agreement by Brown in accordance with the terms of this Agreement, or by Franchisee without cause as provided in Paragraph A of Section 20 of this Agreement.

Franchisee shall not execute a lease which has for any reason been disapproved by Brown. Franchisee shall deliver a copy of the signed lease for the Premises to Brown within fifteen (15) days of its execution.

Franchisee's execution of a lease for a site for the Store shall constitute acceptance by Franchisee of such site and location and of the terms of such lease, sublease or purchase.

Brown's approval of the lease or sublease does not constitute a warranty or representation of any kind, express or implied, as to its fairness, suitability or profitability or as to Franchisee's ability to comply with its terms.

Question 13

What are the Browns Chicken franchisee's obligations regarding site selection (Item 9) and how does the lack of an exclusive territory (Item 12) impact those obligations?

Accepted Answer

| Obligation | Section In Agreement | Item in Franchise Disclosure Document |
|---|---|---|
| (a) Site selection and acquisition/lease | 4A, 4B, 4C and 6 of the Franchise Agreement; Standard Sublease (Exhibit G to the Franchise Disclosure Document) | Items 1, 6, 7, 8, 11 and 12 |

Under the Franchise Agreement Brown grants you the right to operate a BROWN'S Store at a specific location. You will receive an exclusive territory (the "Territory") that will consist of the geographic area that is within a 5-mile radius (as the crow flies) of your Store, unless you are

located in a shopping mall food court in which event you will not receive an exclusive territory. The site of your Store will be inserted in the Franchise Agreement before you sign it, unless the site is not determined when you sign the Franchise Agreement. Except as described below, if you are in full compliance with the Franchise Agreement, Brown will not operate or grant a franchise for the operation of a BROWN's Store within the Territory.

Except as limited by your Franchise Agreement, Brown retains all rights with respect to BROWN's Stores, the Marks, and the sale of goods and services including the right to operate or grant to others the right to operate BROWN'S Stores anywhere outside the Territory regardless of its proximity to your Store and on such terms as we deem appropriate.

Question 14

What are the Browns Chicken franchisee's obligations regarding site selection (Item 9) and how does the lack of an exclusive territory (Item 12) affect those obligations?

Accepted Answer

| Obligation | Section In Agreement | Item in Franchise Disclosure Document |
|---|---|---|
| (a) Site selection and acquisition/lease | 4A, 4B, 4C and 6 of the Franchise Agreement; Standard Sublease (Exhibit G to the Franchise Disclosure Document) | Items 1, 6, 7, 8, 11 and 12 |

Under the Franchise Agreement Brown grants you the right to operate a BROWN'S Store at a specific location. You will receive an exclusive territory (the "Territory") that will consist of the geographic area that is within a 5-mile radius (as the crow flies) of your Store, unless you are

located in a shopping mall food court in which event you will not receive an exclusive territory. The site of your Store will be inserted in the Franchise Agreement before you sign it, unless the site is not determined when you sign the Franchise Agreement. Except as described below, if you are in full compliance with the Franchise Agreement, Brown will not operate or grant a franchise for the operation of a BROWN's Store within the Territory.

The Franchise Agreement provides that you may operate the Store only at the location and on the Premises or a substitute location and/or premises subsequently approved by Brown. If your lease for the Premises expires or terminates without your fault, or if the Premises is destroyed, condemned or otherwise rendered unusable, or if in the judgment of Brown and you there is a change in character of the location of the Store sufficiently detrimental to its business potential to warrant its relocation, Brown will grant permission for relocation of the Store to a location and premises approved by Brown in its sole discretion.

Except as limited by your Franchise Agreement, Brown retains all rights with respect to BROWN's Stores, the Marks, and the sale of goods and services including the right to operate or grant to others the right to operate BROWN'S Stores anywhere outside the Territory regardless of its proximity to your Store and on such terms as we deem appropriate.

Question 15

What are the Browns Chicken franchisee's obligations regarding site selection (Item 9) and how does the shopping mall food court exception (Item 12) impact those obligations?

Accepted Answer

Sandwich Daily Prep Chart                      | 21    |
| Chicago Way Exam                                           | 22-24 |

#### **Item 12 TERRITORY**

Under the Franchise Agreement Brown grants you the right to operate a BROWN'S Store at a specific location. You will receive an exclusive territory (the "Territory") that will consist of the geographic area that is within a 5-mile radius (as the crow flies) of your Store, unless you are

located in a shopping mall food court in which event you will not receive an exclusive territory. The site of your Store will be inserted in the Franchise Agreement before you sign it, unless the site is not determined when you sign the Franchise Agreement. Except as described below, if you are in full compliance with the Franchise Agreement, Brown will not operate or grant a franchise for the operation of a BROWN's Store within the Territory.

The territorial protection granted under the Franchise Agreement is not dependent upon any sales achievement or any other contingency.

#### **Location and Relocation of Store.**

The Franchise Agreement provides that you may operate the Store only at the location and on the Premises or a substitute location and/or premises subsequently approved by Brown. If your lease for the Premises expires or terminates without your fault, or if the Premises is destroyed, condemned or otherwise rendered unusable, or if in the judgment of Brown and you there is a change in character of the location of the Store sufficiently detrimental to its business potential to warrant its relocation, Brown will grant permission for relocation of the Store to a location and premises approved by Brown in its sole discretion. Any such relocation will be at your sole expense. So long as your substitute location is open and operating within 18 months of the closing of the Store at the Premises, and such substitute location is owned and operated by you or your immediate family members, Brown will consider such relocation to be under the same Franchise Agreement. Otherwise, Brown reserves the right to require you to enter into a new Franchise Agreement and to pay an additional initial franchise fee upon relocation.

Question 16

What is the relationship between the Browns Chicken advertising fee (Item 6) and the franchisor's advertising obligations (Item 11)?

Accepted Answer

| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Advertising1 | 4% of Gross Sales2 | Weekly | You must pay by automatic bank draft. See Item 11 regarding the Advertising Fund. |
| Advertising from Video Gaming Sales | 4% of gross sales from Video Gaming | Weekly | You must pay by automatic bank draft. See Item 11 regarding the Advertising Fund. |

#### **B. During Your Operation of The Business, Brown Will:**

1. Brown will maintain and administer an advertising fund (the "Advertising Fund") for such advertising as Brown may deem necessary or appropriate, in its sole discretion (Paragraph A of Section 11 of the Franchise Agreement).

The Franchise Agreement requires you to pay to the Advertising Fund 4% of your Gross Sales. You must pay Brown the Advertising Fund by electronic transfer or automatic bank draft. You must establish an account at a bank acceptable to Brown, execute all documents required by said bank and Brown's bank to effect such transfers, and pay all fees and charges assessed by said banks for such transfers.

Currently, the advertising contribution required is 4% for BROWN'S Stores. Generally, the Advertising Fund does not pay for radio and television advertising programs in a metropolitan or regional area unless the advertising contributions received from BROWN'S Stores in that area can reasonably support such advertising programs.

Brown will from time to time with the assistance of a local advertising agency, formulate, develop, produce and conduct regional advertising and promotion programs in such form and media as Brown determines, in its sole discretion, to be most effective.

The Advertising Fund will be accounted for separately from the other funds of Brown and will not be used to defray any of Brown's general operating expenses, except for such reasonable salaries, administrative costs and overhead as Brown may incur in activities reasonably related to the administration of the Advertising Fund and its advertising programs (including, without limitation, conducting market research, preparing advertising and marketing materials, and collecting and accounting for contributions to the Advertising Fund). Brown may spend in any fiscal year an amount greater or less than the aggregate contribution of BROWN'S Stores to the Advertising Fund in that year and the Advertising Fund may borrow from Brown or other lenders to cover deficits of the Advertising Fund or cause the Advertising Fund to invest any surplus for future use by the Advertising Fund. You authorize Brown to collect for remission to the Advertising Fund any advertising monies or credits offered by any supplier to you based upon your purchases. All interest earned on monies contributed to the Advertising Fund will be used to pay advertising costs of the Advertising Fund before other assets of the Advertising Fund are expended. A statement of monies collected and costs incurred by the Advertising Fund will be prepared annually by Brown and will be reviewed with you upon written request.

The Advertising Fund is intended to maximize recognition of the Marks and patronage of BROWN'S Stores. Although Brown will endeavor to utilize the Advertising Fund to develop advertising and marketing materials and to place advertising in a manner that will benefit all BROWN'S Stores, Brown undertakes no obligation to ensure that expenditures by the Advertising Fund in or affecting any geographic area are proportionate or equivalent to contributions to the Advertising Fund by BROWN'S Stores operating in that geographic area or that any BROWN's Store will benefit directly or in proportion to its contribution to the Advertising Fund from the development of advertising and marketing materials or the placement of advertising. Except as expressly provided in the Franchise Agreement, Brown assumes no direct or indirect liability or obligation to Franchisee with respect to the maintenance, direction, or administration of the Advertising Fund. Brown has no fiduciary obligation to you or any other BROWN'S Store in connection with the establishment of the Advertising Fund or the collection, control or administration of monies paid into the Advertising Fund. (See Paragraph A of Section 11 of the Franchise Agreement, and Items 6, 8, and 9 of this Franchise Disclosure Document.)

Question 17

What is the relationship between the Browns Chicken advertising fee (Item 6) and the franchisor's advertising responsibilities (Item 11)?

Accepted Answer

| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Advertising1 | 4% of Gross Sales2 | Weekly | You must pay by automatic bank draft. See Item 11 regarding the Advertising Fund. |
| Advertising from Video Gaming Sales | 4% of gross sales from Video Gaming | Weekly | You must pay by automatic bank draft. See Item 11 regarding the Advertising Fund. |

1. Brown will maintain and administer an advertising fund (the "Advertising Fund") for such advertising as Brown may deem necessary or appropriate, in its sole discretion (Paragraph A of Section 11 of the Franchise Agreement).

The Franchise Agreement requires you to pay to the Advertising Fund 4% of your Gross Sales. You must pay Brown the Advertising Fund by electronic transfer or automatic bank draft. You must establish an account at a bank acceptable to Brown, execute all documents required by said bank and Brown's bank to effect such transfers, and pay all fees and charges assessed by said banks for such transfers.

Currently, the advertising contribution required is 4% for BROWN'S Stores. Generally, the Advertising Fund does not pay for radio and television advertising programs in a metropolitan or regional area unless the advertising contributions received from BROWN'S Stores in that area can reasonably support such advertising programs.

Brown will from time to time with the assistance of a local advertising agency, formulate, develop, produce and conduct regional advertising and promotion programs in such form and media as Brown determines, in its sole discretion, to be most effective.

The Advertising Fund will be accounted for separately from the other funds of Brown and will not be used to defray any of Brown's general operating expenses, except for such reasonable salaries, administrative costs and overhead as Brown may incur in activities reasonably related to the administration of the Advertising Fund and its advertising programs (including, without limitation, conducting market research, preparing advertising and marketing materials, and collecting and accounting for contributions to the Advertising Fund). Brown may spend in any fiscal year an amount greater or less than the aggregate contribution of BROWN'S Stores to the Advertising Fund in that year and the Advertising Fund may borrow from Brown or other lenders to cover deficits of the Advertising Fund or cause the Advertising Fund to invest any surplus for future use by the Advertising Fund. You authorize Brown to collect for remission to the Advertising Fund any advertising monies or credits offered by any supplier to you based upon your purchases. All interest earned on monies contributed to the Advertising Fund will be used to pay advertising costs of the Advertising Fund before other assets of the Advertising Fund are expended. A statement of monies collected and costs incurred by the Advertising Fund will be prepared annually by Brown and will be reviewed with you upon written request.

The Advertising Fund is intended to maximize recognition of the Marks and patronage of BROWN'S Stores. Although Brown will endeavor to utilize the Advertising Fund to develop advertising and marketing materials and to place advertising in a manner that will benefit all BROWN'S Stores, Brown undertakes no obligation to ensure that expenditures by the Advertising Fund in or affecting any geographic area are proportionate or equivalent to contributions to the Advertising Fund by BROWN'S Stores operating in that geographic area or that any BROWN's Store will benefit directly or in proportion to its contribution to the Advertising Fund from the development of advertising and marketing materials or the placement of advertising.

Question 18

What is the relationship between the Browns Chicken advertising fee (Item 6) and the franchisor's control over the advertising fund (Item 11)?

Accepted Answer

| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Advertising1 | 4% of Gross Sales2 | Weekly | You must pay by automatic bank draft. See Item 11 regarding the Advertising Fund. |
| Advertising from Video Gaming Sales | 4% of gross sales from Video Gaming | Weekly | You must pay by automatic bank draft. See Item 11 regarding the Advertising Fund. |

#### **B. During Your Operation of The Business, Brown Will:**

1. Brown will maintain and administer an advertising fund (the "Advertising Fund") for such advertising as Brown may deem necessary or appropriate, in its sole discretion (Paragraph A of Section 11 of the Franchise Agreement).

The Franchise Agreement requires you to pay to the Advertising Fund 4% of your Gross Sales. You must pay Brown the Advertising Fund by electronic transfer or automatic bank draft. You must establish an account at a bank acceptable to Brown, execute all documents required by said bank and Brown's bank to effect such transfers, and pay all fees and charges assessed by said banks for such transfers.

Brown will from time to time with the assistance of a local advertising agency, formulate, develop, produce and conduct regional advertising and promotion programs in such form and media as Brown determines, in its sole discretion, to be most effective.

Franchisee understands and acknowledges that the Advertising Fund is intended to maximize recognition of the Marks and patronage of BROWN'S Stores. Although Brown will endeavor to utilize the Advertising Fund to develop advertising and marketing materials, and to place advertising in a manner, that will benefit all BROWN'S Stores, Brown undertakes no obligation to ensure that expenditures by the Advertising Fund in or affecting any geographic area are proportionate or equivalent to contributions to the Advertising Fund by BROWN'S Stores operating in that geographic area or that any BROWN'S Store will benefit directly or in proportion to its contribution to the Advertising Fund from the development of advertising and marketing materials or the placement of advertising. Except as expressly provided in this Section 11, Brown assumes no direct or indirect liability or obligation to Franchisee with respect to the maintenance, direction or administration of the Advertising Fund. Franchisee agrees and acknowledges that Brown has no fiduciary obligation to Franchisee or any other BROWN's Store in connection with the establishment of the Advertising Fund or the collection, control or administration of monies paid into the Advertising Fund.

Brown reserves the right, in its sole discretion, to terminate or discontinue the Advertising Fund upon thirty (30) days' written notice to Franchisee. All unspent monies on the date of termination or discontinuance shall be distributed to franchisees of Brown in proportion to their respective contributions made to the Advertising Fund during the previous twelve (12) month period. Brown shall have the right to reinstate the Advertising Fund upon the same terms and conditions herein set forth upon thirty (30) days' prior written notice to Franchisee.

Question 19

What is the relationship between the Browns Chicken advertising fee payment (Item 6) and the franchisor's discretion in advertising (Item 11)?

Accepted Answer

| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Advertising1 | 4% of Gross Sales2 | Weekly | You must pay by automatic bank draft. See Item 11 regarding the Advertising Fund. |

#### **B. During Your Operation of The Business, Brown Will:**

1. Brown will maintain and administer an advertising fund (the "Advertising Fund") for such advertising as Brown may deem necessary or appropriate, in its sole discretion (Paragraph A of Section 11 of the Franchise Agreement).

The Franchise Agreement requires you to pay to the Advertising Fund 4% of your Gross Sales. You must pay Brown the Advertising Fund by electronic transfer or automatic bank draft. You must establish an account at a bank acceptable to Brown, execute all documents required by said bank and Brown's bank to effect such transfers, and pay all fees and charges assessed by said banks for such transfers.

Currently, the advertising contribution required is 4% for BROWN'S Stores. Generally, the Advertising Fund does not pay for radio and television advertising programs in a metropolitan or regional area unless the advertising contributions received from BROWN'S Stores in that area can reasonably support such advertising programs.

Brown will from time to time with the assistance of a local advertising agency, formulate, develop, produce and conduct regional advertising and promotion programs in such form and media as Brown determines, in its sole discretion, to be most effective.

The Advertising Fund will be accounted for separately from the other funds of Brown and will not be used to defray any of Brown's general operating expenses, except for such reasonable salaries, administrative costs and overhead as Brown may incur in activities reasonably related to the administration of the Advertising Fund and its advertising programs (including, without limitation, conducting market research, preparing advertising and marketing materials, and collecting and accounting for contributions to the Advertising Fund). Brown may spend in any fiscal year an amount greater or less than the aggregate contribution of BROWN'S Stores to the Advertising Fund in that year and the Advertising Fund may borrow from Brown or other lenders to cover deficits of the Advertising Fund or cause the Advertising Fund to invest any surplus for future use by the Advertising Fund. You authorize Brown to collect for remission to the Advertising Fund any advertising monies or credit

Question 20

What is the relationship between the Browns Chicken advertising fee payment (Item 6) and the franchisor's use of the advertising fund (Item 11)?

Accepted Answer

| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Royalty Fee on food sales1 | 5% of Gross Sales2 subject to modification as provided below. | Weekly | You must pay by automatic bank draft. |
| Video Gaming Royalty Fee | 10% of gross sales from Video Gaming revenue. | Weekly | You must pay by automatic bank draft. |
| Advertising1 | 4% of Gross Sales2 | Weekly | You must pay by automatic bank draft. See Item 11 regarding the Advertising Fund. |
| Advertising from Video Gaming Sales | 4% of gross sales from Video Gaming | Weekly | You must pay by automatic bank draft. See Item 11 regarding the Advertising Fund.

Question 21

What is the relationship between the Browns Chicken equipment restrictions in Item 8 and the assistance Brown provides before opening, as described in Item 11?

Accepted Answer

[Item 8: RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES]

#### **Item 8 RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES**

You are not obligated to purchase or lease any product or service from Brown or from any designated source except as provided herein.

#### **Equipment, Fixtures, Furniture and Signs.**

Brown will provide you with a list of approved brands, types and/or models of equipment, fixtures, furniture and signs required for the Store. You must use in the operation of the Store only those brands, types and/or models of equipment for the preparation, dispensing, storage, display and delivery of food and beverages, cash registers, fax machine, computers, cameras, remote access, and other equipment, fixtures, furniture and signs that Brown has approved as meeting its specifications and standards. Our current approved supplier of video gaming equipment is Aceel Entertainment, of Burr Ridge, Illinois. Brown's specifications and standards may include minimum standards for design, appearance, function, performance, serviceability and warranties. Except for the POS System (see Item 11), you may purchase or lease approved brands, types and/or models of equipment, fixtures, furniture and signs from any source. Brown has in the past, and may in the future, sell at a reduced fee or lease, used equipment to Franchisees. Brown's ability to lease or sell such equipment is subject to the availability of such used equipment packages. If you propose to purchase or lease any brand, type and/or model of equipment, fixture, furniture or sign not then approved by Brown, you must first notify Brown in writing, and must submit to Brown upon its request sufficient specifications, photographs, drawings and/or other information or samples for a determination by Brown of whether such brand, type and/or model of equipment, fixture, furniture or sign meets its specifications and standards. Brown shall notify you within a reasonable time whether it approves such brand, type and/or model of equipment, fixture, furniture or sign. The time in which Brown will approve or disapprove the proposed brand, type and/or model of equipment, fixture, furniture or sign will be between 2 to 6 months, depending on the specific proposed equipment, fixture, furniture, sign or supplier, the speed with which the supplier responds to Brown's requests, and other factors.

#### **Food And Beverage Products, Supplies and Materials.**
[Item 11: FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING]
---

#### **Item 11 FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING**

**Except as stated below, Brown need not provide any assistance to you.**

#### **A. Before You Open Your Business, Brown Will Do the Following:**

- 1. As described above in Item 6, Brown may secure and lease or purchase a site or premises acceptable to you for sublease or resale to you or will assist you in leasing or purchasing a suitable site, although Brown is not obligated by the Franchise Agreement or by any other document to do so (Paragraphs A and B of Section 4 of the Franchise Agreement).
- 2. Prior to the opening of the Store, Brown will furnish, and you (if you are a corporation or partnership, a shareholder or partner you designate), 1 co-manager, and 1 part-time manager must attend and complete to Brown's satisfaction, a mandatory training program in the operation of a BROWN's Store, which training program will last approximately 8 weeks as follows:

---
2. Brown will furnish you such operating assistance in connection with the operation of the Store as you may reasonably require from time to time. Operating assistance will consist of advice and guidance with respect to: (a) methods for the preparation, packaging, sale and delivery of food and other products authorized for sale by BROWN'S Stores; (b) specifications, standards, methods and operating procedures utilized by BROWN'S Stores; (c) additional food and beverage products and services authorized for sale by BROWN'S Stores; (d) purchasing approved equipment, furniture, furnishings and signs; (e) selection, purchasing and preparation of food products, beverages and other approved products, materials and supplies; (f) developing and implementing advertising and promotional programs; (g) the establishment and operation of administrative, bookkeeping, accounting, inventory control, sale and general operating and management procedures for BROWN'S Stores; and (h) hiring employees and establishing and conducting employee training programs.

Question 22

What is the relationship between the Browns Chicken franchisee's obligation to pay advertising fees (Item 6) and the franchisor's advertising responsibilities (Item 11)?

Accepted Answer