Does the Browns Chicken exclusive relationship extend to the immediate family of the franchisee?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges and agrees that Brown would be unable to protect the Confidential Information against unauthorized use and disclosure and would be unable to encourage a free exchange of ideas and information among BROWN'S Stores if owners of BROWN'S Stores and members of their immediate families were permitted to hold interests in or perform services for competitive businesses. Brown has entered into this Agreement with Franchisee on the express condition that with respect to the operation of a retail food service business which offers cooked chicken, pasta, or sandwiches. Franchisee (and its owners and members of their respective immediate families) will deal exclusively with Brown. Franchisee therefore agrees that during the term of this Agreement, except for the Store and other BROWN'S Stores operated under franchise agreements with Brown: (1) neither Franchisee, nor any shareholder or partner of Franchisee (in the event Franchisee, is a corporation or partnership), nor any member of the immediate family of Franchisee or any shareholder or partner of Franchisee, shall have any direct or indirect interest as a disclosed or beneficial owner of any retail food service business wherever located, that offers cooked chicken, pasta or sandwiches, or any direct or indirect interest in any entity which is granting franchises or licenses to others to operate retail food service businesses that offer cooked chicken, pasta or sandwiches; and (2) neither Franchisee nor any partner or shareholder of Franchisee shall perform services as a director, officer, manager, employee, consultant, lessor, lender, representative, agent or otherwise for any retail food service business wherever located, that offers cooked chicken, pasta or sandwiches; provided that the restrictions of this Section 15 shall not be applicable to the ownership of shares of a class of securities listed on a stock exchange or traded on the over-the- counter market that represent one percent (1%) or less of the number of shares of that class of securities issued and outstanding.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, the exclusive relationship extends to the franchisee's immediate family. Browns Chicken includes this provision to protect their confidential information and encourage the free exchange of ideas among Browns Chicken stores.
Specifically, the franchise agreement stipulates that the franchisee and their immediate family members cannot hold interests in or perform services for competitive businesses that offer cooked chicken, pasta, or sandwiches. This restriction applies to direct or indirect interests, whether as a disclosed or beneficial owner. It also extends to any entity granting franchises or licenses for similar retail food service businesses.
However, there is an exception: the restrictions do not apply to owning shares of a class of securities listed on a stock exchange or traded over-the-counter, as long as those shares represent 1% or less of the outstanding shares of that class. This allows franchisees and their families to invest in publicly traded companies that may have a competing business without violating the franchise agreement.