What are some examples of non-curable defaults that could lead to termination of a Browns Chicken franchise?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Agreement | Summary |
|---|---|---|
| (a) Length of the franchise term | 2A | Approximately 15 years, subject to earlier termination as provided in the Franchise Agreement. |
| (b) Renewal or extension of the term | 2B | If you are in compliance with the Franchise Agreement and give 6 months’ notice of your intent to renew prior to the end of the term, Brown will renew the franchise for a 1 year (minimum) or 5 year term (maximum). |
| Provision | Section in Agreement | Summary |
| (c) Requirements for Franchisee to renew or extend | 2B | Compliance with Franchise Agreement and any other agreements, including leases; remodel and update; sign new franchise agreement; pay $5,000 renewal fee. The renewal agreement may contain materially different terms and conditions than your original contract, but the royalty fee will not be greater than the royalty fee that we then impose on similarly-situated renewing franchisees |
| (d) Termination by Franchisee | 20A | Only if you are in compliance with the Franchise Agreement and Brown fails to cure its own material breach within 30 days of written notice. |
| (e) Termination by Franchisor | None | No specific provision. |
| without cause | ||
| (f) Termination by Franchisor with cause | 20B and 21D | Brown can terminate the Franchise if you default under any agreement; upon termination of the Franchise, any sublease from Brown will terminate, and you may be required to assign your lease to Brown. |
| (g) "Cause" defined – curable defaults | 20B | Upon notice as provided in the Franchise Agreement, the following defaults may be curable: failure to complete training, failure to secure a site or retain or develop it according to Brown's specifications, non-payment of fees (unless repeated), failure to operate the Store in compliance with Brown's standards. For Illinois franchisees, Brown must give you a reasonable time franchise to cure, which need not be more than 30 days. If the time frame is less than 30 days, the causes must be related to health and safety. |
| (h) "Cause" defined –non-curable defaults | 20B | Non-curable defaults include: filing bankruptcy or making an assignment for the benefit of creditors, abandonment, repeated defaults even if cured, repeated filing of false reports, making unauthorized transfer of franchise, conviction of crime, making material misrepresentations, making unauthorized use of proprietary information, competition with Brown. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 36–38)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, certain defaults are considered non-curable and can lead to immediate termination of the franchise agreement. These defaults, as outlined in Section 20B of the Franchise Agreement, include specific actions or events that Browns Chicken deems severe enough to warrant termination without an opportunity for the franchisee to correct the issue.
Examples of non-curable defaults include filing for bankruptcy or making an assignment for the benefit of creditors, which indicates financial instability. Abandonment of the Browns Chicken franchise, repeated defaults even if they were previously cured, and repeated filing of false reports are also considered non-curable defaults. Furthermore, making an unauthorized transfer of the franchise, being convicted of a crime, making material misrepresentations, making unauthorized use of proprietary information, or engaging in competition with Browns Chicken are all grounds for immediate termination.
These stipulations are important for prospective franchisees to understand, as they highlight the seriousness with which Browns Chicken views certain breaches of the franchise agreement. Unlike curable defaults, which allow a franchisee a period to rectify the issue, non-curable defaults can result in immediate termination, potentially leading to significant financial losses for the franchisee. Therefore, it is crucial for franchisees to avoid these actions to maintain a good standing with Browns Chicken and ensure the longevity of their franchise.