Does the Collateral Assignment require the Lessor's consent to be effective for the Browns Chicken franchise?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
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. The lease shall contain substantially the following provisions:
"Anything contained in this lease to the contrary notwithstanding, Lessor agrees that, without its consent, this lease and the right, title and interest of the Lessee thereunder, may be assigned by the Lessee to Brown's Chicken, LLC, an Illinois limited liability company, or its designee, provided that said Brown's Chicken, LLC or its designee shall execute such documents evidencing its agreement to thereafter keep and perform, or cause to be kept or performed, all of the obligations of the Lessee arising under this lease from and after the time of such assignment."
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to the 2025 Browns Chicken Franchise Disclosure Document, the lease for the premises must allow assignment to Browns Chicken without the lessor's consent. Specifically, the lease should state that "Anything contained in this lease to the contrary notwithstanding, Lessor agrees that, without its consent, this lease and the right, title and interest of the Lessee thereunder, may be assigned by the Lessee to Brown's Chicken, LLC, an Illinois limited liability company, or its designee, provided that said Brown's Chicken, LLC or its designee shall execute such documents evidencing its agreement to thereafter keep and perform, or cause to be kept or performed, all of the obligations of the Lessee arising under this lease from and after the time of such assignment."
This provision is crucial for Browns Chicken because it ensures that Browns Chicken can step in as the lessee if the franchisee defaults or the franchise agreement is terminated. This protects Browns Chicken's interest in maintaining a location for a Browns Chicken restaurant. The lessor must also provide Browns Chicken with notice of any franchisee default and allow Browns Chicken time to cure the default.
For a prospective Browns Chicken franchisee, this means that the lease agreement they sign must include specific language allowing assignment to Browns Chicken without the lessor's consent. Franchisees should carefully review the lease with their attorney to ensure it meets Browns Chicken's requirements. Failure to include this provision could result in Browns Chicken disapproving the lease.