factual

What is the consideration for the execution of the Sublease Agreement related to Browns Chicken?

Browns_Chicken Franchise · 2025 FDD

Answer from 2025 FDD Document

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.

4. LEASE AND DEVELOPMENT OF STORE.

A. Lease Of Premises.

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."

"Lessor agrees that Lessor shall, upon written request of Brown's Chicken, LLC, disclose to said limited liability company, all reports, information or data in Lessor's possession with respect to sales made in, upon or from the leased premises."

"Lessor shall give written notice to Brown's Chicken, LLC, an Illinois limited liability company (concurrently with the giving of such notice to Lessee), of any default by Lessee under the lease and the said Brown's Chicken, LLC shall have, after the expiration of the period during which the Lessee may cure such default, an additional thirty (30) days to cure, at its sole option, any such default."

Franchisee shall not assign or in any manner transfer the lease or sublease, as the case may be, for the Premises or any interest therein (except in connection with an assignment or transfer of the Franchise or ownership of Franchisee approved by Brown as provided in Section 22), or further sublet the Premises or any part or parts thereof, nor permit occupancy by anyone with, through, or under Franchisee.

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 shall execute a Collateral Assignment of Lease, attached hereto as Rider B, by which Franchisee assigns to Brown all of his right, title and interest as tenant under the lease for the Store premises. The assignment is for collateral purposes and may be exercised only upon a default by Franchisee under his lease or under this Agreement. Brown's approval of Franchisee's lease is conditioned on receipt of the signed Collateral Assignment.

Source: Item 22 — Contracts (FDD page 43)

What This Means (2025 FDD)

Based on the 2025 Franchise Disclosure Document, the consideration for the execution of the Sublease Agreement with Browns Chicken involves several obligations and conditions for the franchisee. The franchisee's execution of a lease for a site constitutes acceptance of the site, location, and terms of the lease, sublease, or purchase. Browns Chicken's approval of the lease or sublease does not provide any warranty regarding its fairness, suitability, or profitability.

If the franchisee leases the premises, the lease must include specific provisions that protect Browns Chicken's interests. These provisions include Browns Chicken receiving notice of any franchisee default at least ten days before any eviction action, the option for Browns Chicken to cure the default and become the lessee, and the premises being used exclusively as a Browns Chicken store. The lease must also allow for its assignment to Browns Chicken if the Franchise Agreement is terminated, either by Browns Chicken or by the franchisee without cause.

Additionally, the franchisee cannot assign or transfer the lease or sublease without Browns Chicken's approval, except when transferring the franchise itself. The franchisee must also provide Browns Chicken with a copy of the signed lease within fifteen days of its execution and execute a Collateral Assignment of Lease, which assigns the franchisee's rights as a tenant to Browns Chicken as collateral. This assignment can be exercised if the franchisee defaults on the lease or the Franchise Agreement, and Browns Chicken's approval of the lease is contingent upon receiving this signed Collateral Assignment.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.