Does the Browns Chicken FDD disclose any litigation beyond the four cases mentioned?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
and Brown's Chicken, LLC.
Brown's Chicken, LLC v. THE HIGHLAND FLING, INC. and Joan Portillo, Circuit Court of the 18th Judicial Circuit, Illinois, Case No. 2011L000554, filed on May 17, 2011. This is an action brought by the Franchisor against a former Franchisee, including one of the principals of BCP, the predecessor to the Franchisor, alleging that Defendants breached their Franchise Agreement in connection with a certain Brown's restaurant located in Highland, Indiana. Franchisor alleges that the Defendants breached the Franchise Agreement by failing and refusing to pay past due royalties and Advertising Fund fees. Franchisor seeks damages in the amount of $192,879.59 plus interest and collection costs. On September 23, 2013, Default Judgment was entered against The Highland Fling, Inc. for $185,142.22. This case was settled as part of the Global Settlement Agreement described above in the case between Joan Portillo v. Bonnie Kennefick and Brown's Chicken, LLC.
Other than the above 4 matters, no other litigation is required to
Source: Item 3 — LITIGATION (FDD pages 10–11)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, Item 3, regarding litigation, states that no other litigation is required to be disclosed beyond the four cases that are described in detail. These four cases involve disputes between Browns Chicken and former franchisees, as well as a shareholder dispute.
The cases include allegations of breach of contract, failure to pay royalties and advertising fees, trademark infringement, and disputes over equipment and lease agreements. Damages sought by Browns Chicken in these cases range from $24,102.30 to $192,879.59. One case resulted in a default judgment of $185,142.22 against The Highland Fling, Inc. Several of the cases were settled as part of a Global Settlement Agreement and Mutual Release.
For a prospective franchisee, this statement provides some assurance that Browns Chicken is not involved in any other undisclosed legal disputes that could materially impact the franchise system. However, it is important to note that the disclosure is limited to litigation that is "required to be disclosed," which may leave room for interpretation. A prospective franchisee may want to inquire further about any other potential legal issues, even if they are not technically required to be disclosed in the FDD.