What administration fee does Browns Chicken charge if they obtain insurance for the franchisee?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Prior to the expiration of the term of each insurance policy, Franchisee shall furnish Brown with a certificate of insurance evidencing the continuation of coverage under a similar policy for an immediately following term, and upon Brown's request, a copy of each such policy. If Franchisee fails or refuses to maintain required insurance coverage or to furnish satisfactory evidence thereof and the payment of the premiums therefor, Brown, at its option and in addition to its other rights and remedies hereunder, may obtain such insurance coverage on behalf of Franchisee and Franchisee shall fully cooperate with Brown in its effort to obtain such insurance policies, promptly execute all forms or instruments required to obtain or maintain any such insurance, allow any inspections of the Store which are required to obtain or maintain such insurance and pay to Brown, on demand, any costs and premiums incurred by Brown. In the event Brown obtains Franchisee's insurance pursuant to this paragraph, Brown may withdraw the monthly costs of insurance, plus an additional ten percent (10%) administration fee, from Franchisee's bank account, through Franchisee's Bank Draft Plan established pursuant to Paragraph 19.F.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, if a franchisee fails to maintain the required insurance coverage, Browns Chicken has the option to obtain the insurance on behalf of the franchisee. In this case, Browns Chicken may withdraw the monthly insurance costs from the franchisee's bank account, and also charge an additional administration fee. This fee is equal to ten percent (10%) of the insurance costs.
This means that if Browns Chicken secures insurance for a franchisee, the franchisee will not only be responsible for the cost of the insurance premiums but also an additional 10% of that cost as an administration fee. This could increase the overall cost of insurance for the franchisee.
It is important for prospective Browns Chicken franchisees to maintain their required insurance coverage to avoid Browns Chicken securing insurance on their behalf and incurring the additional 10% administration fee. Franchisees should clarify with Browns Chicken what the typical costs of insurance are for their franchise location so they can budget accordingly.