What is the express condition upon which Browns Chicken enters into the franchise agreement regarding competitive businesses?
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, Browns Chicken enters into the franchise agreement on the express condition that the franchisee (including owners and their immediate families) deals exclusively with Browns Chicken regarding the operation of a retail food service business that offers cooked chicken, pasta, or sandwiches.
Specifically, during the term of the agreement, the franchisee, shareholders, partners, and their immediate families cannot have any direct or indirect interest in any retail food service business that offers cooked chicken, pasta, or sandwiches, regardless of location. This also extends to any entity granting franchises or licenses for similar businesses. Furthermore, the franchisee, partners, or shareholders cannot perform services as a director, officer, manager, employee, consultant, lessor, lender, representative, or agent for any such retail food service business.
There is an exception to this exclusivity condition. The restriction does not apply to the ownership of shares of a class of securities listed on a stock exchange or traded on the over-the-counter market, provided that the shares represent one percent (1%) or less of the total outstanding shares of that class. This condition ensures that Browns Chicken franchisees are fully committed to the Browns Chicken system and do not divert their resources or expertise to competing businesses during the term of their franchise agreement.