Can an extension of time granted to the Browns Chicken franchisee affect the guarantor's liability?

Based on the 2025 Browns Chicken Franchise Disclosure Document, the selling franchisee and its owners will remain liable (and will execute a guaranty if requested by Browns Chicken) for the performance by the transferee of its obligations under the Franchise Agreement. This liability extends for a duration not exceeding the remainder of the transferor's Franchise Agreement, as determined by Browns Chicken. This means that if a Browns Chicken franchisee transfers their franchise to a new owner, the original franchisee (the seller) might still be on the hook for the new owner's performance.

This continued liability is contingent on Browns Chicken requesting a guaranty from the selling franchisee. The duration of this liability is capped at the remaining term of the original franchise agreement. Browns Chicken retains the authority to determine the specific length of this liability period.

For a prospective Browns Chicken franchisee, this clause highlights the importance of carefully vetting potential buyers if they plan to sell their franchise in the future. Even after selling, they could remain responsible for the new owner's actions, potentially impacting their financial stability. It is crucial to understand the terms of the guaranty and negotiate the duration of liability with Browns Chicken during the transfer process.