Where can I find information about the termination of the Browns Chicken franchise?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
D. Termination Of Sublease/Assignment of Lease.
Upon termination or expiration of the Franchise, unless the Franchise is terminated by Franchisee for cause, the sublease from Brown to the Franchisee, if any, for the Premises of the Store, shall automatically terminate, or if Franchisee is the lessee of the Premises, Brown shall have the right to require Franchisee to assign its lease for the Premises to Brown or Brown's designee.
E. Restriction On Competition.
If the Franchise expires, is not renewed or is terminated prior to its expiration for any reason, Franchisee agrees that for a period of eighteen (18) months commencing on the effective
date of expiration or termination of the Franchise, or the date on which Franchisee ceases to conduct the business conducted pursuant to this Agreement, whichever is later, it will not:
- (1) engage, directly or indirectly, as an owner (except of publicly-traded securities), partner, director, officer, employee, consultant, lessor, lender, representative or agent, or in any other capacity in a retail food service business featuring cooked chicken, pasta, or sandwiches, and which is located within five (5) miles of the Store or any BROWN's Store, or in any entity which is granting franchises or licenses for retail food service businesses featuring cooked chicken, pasta or sandwiches; or
- (2) lease, let or sublease any real property or personal property to any person, corporation, partnership or any other entity engaged directly or indirectly in any retail food service business featuring cooked chicken, pasta or sandwiches located within five (5) miles of the Store or any BROWN's Store.
To the extent that this Paragraph E of Section 21 is deemed unenforceable by virtue of its scope in terms of area or length of time or activity restrained, but may be made enforceable by reduction of any or all thereof, Franchisee and Brown agree that the same shall be enforced to the fullest extent permissible under the laws and public policies applied in the jurisdiction in which enforcement is sought.
F. Continuing Obligations.
21. FRANCHISEE'S OBLIGATIONS UPON TERMINATION OR EXPIRATION.
A. Payment of Amounts Owed to Brown.
Upon termination or expiration of the Franchise, Franchisee agrees to pay to Brown and its affiliated companies, within fifteen (15) days after the effective date of termination or expiration, such royalties and service fees, advertising contributions, rent, if applicable, and other charges (including interest on past due amounts) as have or will thereafter become due to Brown or any affiliated company and are then unpaid.
B. Confidential Information.
Franchisee agrees that upon termination or expiration of the Franchise, it will immediately cease to use any Confidential Information of Brown disclosed to Franchisee pursuant to this Agreement in any business or otherwise and will return to Brown all copies of the Operating Manual and other confidential materials which have been lent to it by Brown.
C. Cancellation Of Assumed Names/Transfer of Telephone Numbers.
B. By Brown.
Brown may terminate this Agreement, effective upon delivery of notice of termination to Franchisee, if Franchisee, the Store or the principal owner or owners of the equity or operating control of Franchisee:
- (1) fails to satisfactorily complete the training program as provided in Section 7 hereof;
- (2) fails to lease or purchase an acceptable site for the Premises, develop the Store in accordance with plans and specifications approved by Brown and commence operation of the Store within one hundred eighty (180) days from the date of this Agreement;
- (3) makes an assignment for the benefit of creditors or an admission of his inability to pay its obligations as they become due;
- (4) files a voluntary petition in bankruptcy or any pleading seeking any reorganization, arrangement, composition, adjustment, liquidation, dissolution or similar relief under any law, or admitting or failing to contest the material allegations of any such pleading filed against it, or is adjudicated a bankrupt or insolvent, or a receiver is appointed for a substantial part of the assets of Franchisee or the Store, or the claims of creditors of Franchisee or the Store are abated or subject to a moratorium under any law;
- (5) abandons, surrenders or transfers control of the operation of the Store or fails to continuously and actively operate the Store, unless precluded from doing so by damage to the Premises, war, civil disturbance, natural disaster, labor dispute or other event beyond Franchisee's reasonable control;
- (6) suffers cancellation of or fails to renew or extend the lease or sublease for or otherwise fails to maintain possession of the Premises, unless the Store is relocated with the approval of Brown;
- (7) submits to Brown on two (2) or more separate occasions during the term of the Franchise, a sales report, financial statement or tax return or schedule which understates the Gross Sales of the Store for any period by more than two percent (2%) or materially distorts any other material information;
- (8) fails on three (3) or more separate occasions during the term of the Franchise to submit when due, sales reports, financial statements or tax returns or schedules or to pay, when due, the royalty fees, advertising contributions or other payments due to Brown or suppliers of the Store or otherwise repeatedly fails or refuses to comply with this Agreement, whether or not such failures or refusals are corrected after notice thereof is delivered to Franchisee;
- (9) operates the Store in a manner that presents a health or safety hazard to its customers, employees, or the public;
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, Item 22 details the contracts and agreements related to the franchise, including information on termination. Specifically, Section D discusses the termination of subleases or assignment of leases upon franchise termination, unless the franchisee terminates for cause. Section E outlines restrictions on competition if the franchise expires, is not renewed, or is terminated early, preventing the franchisee from engaging in similar businesses within a 5-mile radius for 18 months. Section 21 addresses the franchisee's obligations upon termination or expiration, including payment of outstanding amounts, ceasing use of confidential information, and cancellation of assumed names.
Browns Chicken can terminate the franchise agreement under certain conditions, such as failure to complete training, failure to secure an acceptable site and commence operations within 180 days, or instances of financial instability like bankruptcy filings. Other grounds for termination by Browns Chicken include abandoning the store, failing to maintain possession of the premises, submitting false sales reports, or repeatedly failing to comply with the franchise agreement. Operating the store in a manner that presents a health or safety hazard also constitutes grounds for termination.
These provisions are typical in franchise agreements to protect the franchisor's brand and interests. Prospective Browns Chicken franchisees should carefully review these sections to understand their rights and obligations upon termination, as well as the potential restrictions they may face. Understanding these conditions is crucial for making an informed decision about investing in a Browns Chicken franchise.