Can a former Browns Chicken franchisee own publicly-traded securities in a competing business during the restriction period?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to the 2025 Browns Chicken Franchise Disclosure Document, a former franchisee is allowed to own publicly-traded securities in a competing business during the 18-month restriction period after the franchise agreement expires, is not renewed, or is terminated. This is a specific exception to the general restriction on engaging in or having an ownership interest in a competing retail food service business featuring cooked chicken, pasta, or sandwiches.
However, this exception only applies to publicly-traded securities. The franchisee cannot be involved as an owner (except of publicly-traded securities), partner, director, officer, employee, consultant, lessor, lender, representative, or agent in a competing business. The competing business must feature cooked chicken, pasta, or sandwiches and be located within five miles of the former Browns Chicken store or any other Browns Chicken store.
This exception provides some flexibility for former Browns Chicken franchisees to invest in publicly-traded companies in the food service sector without violating the non-compete agreement. However, it's crucial to understand that any other form of ownership or active involvement in a competing business within the specified geographic area would still be a breach of the agreement.