Does the Browns Chicken Franchise Disclosure Document include a Preliminary Agreement?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
itled to any refund of the Deposit.
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- BROWN agrees to expend such time and effort and to incur such expense as may reasonably be required to inspect sites proposed by PROSPECTIVE FRANCHISEE for a Store to be operated by PROSPECTIVE FRANCHISEE. PROSPECTIVE FRANCHISEE may withdraw his application for a Franchise and terminate this Preliminary Agreement by a written notice of termination delivered to BROWN at any time prior to the submission by PROSPECTIVE FRANCHISEE of a proposed site and BROWN's approval of said site. In the event PROSPECTIVE FRANCHISEE withdraws his application for a Franchise after a site has been approved, PROSPECTIVE FRANCHISEE will not be entitled to any refund of the Deposit.
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- Upon termination pursuant to Paragraph 3.d. above, BROWN shall refund PROSPECTIVE FRANCHISEE's Deposit less Three Thousand ($3,000.00) Dollars. Upon termination pursuant to Paragraph 5 above, prior to the approval by BROWN of a site, BROWN shall refund PROSPECTIVE FRANCHISEE's Deposit less Three Thousand ($3,000.00) Dollars. Upon termination pursuant to Paragraph 5 above, subsequent to the approval by BROWN of a site, PROSPECTIVE FRANCHISEE shall not be entitled to any refund of the Deposit. In the event of termination pursuant to Paragraph 3.a. above, BROWN shall refund all of PROSPECTIVE FRANCHISEE's Deposit. The amount withheld by BROWN is to compensate the expenses incurred by BROWN in connection with PROSPECTIVE FRANCHISEE's proposed purchase of a Franchise, including, without limitation, those expenses related to site selection and inspection of a site for PROSPECTIVE FRANCHISEE's Store, travel and living expenses, compensation of employees of BROWN and legal fees and expenses.
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- PROSPECTIVE FRANCHISEE's rights under this Preliminary Agreement are personal in nature and are not transferable by assignment, will or operation of law.
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- Upon expiration of the sixty-day period referred to in Paragraph 3 above, this Agreement may be extended for such period of time mutually agreed upon by the parties.
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- Notwithstanding the expiration of this Agreement, the parties agree that in the event PROSPECTIVE FRANCHISEE submits a proposed site to BROWN within twenty (20) days prior to the expiration date, this Agreement will not expire until BROWN has had a reasonable opportunity to evaluate the site to determine whether the
Source: Item 23 — RECEIPT (FDD pages 43–202)
What This Means (2025 FDD)
Yes, the 2025 Browns Chicken Franchise Disclosure Document includes a Preliminary Agreement. This agreement outlines the initial steps and conditions before a franchisee enters into the full franchise agreement.
Specifically, the Preliminary Agreement addresses the prospective franchisee's responsibilities in locating a suitable site for their Browns Chicken store within a defined area, typically within sixty days. Browns Chicken also commits to providing written site selection criteria upon the agreement's execution, which must be returned if the agreement terminates. The agreement clarifies that the area is not exclusive, allowing Browns Chicken to grant franchises to others within the same area, which could lead to termination of the agreement with a refund of the deposit under certain conditions.
The document also details the circumstances under which the prospective franchisee may or may not receive a refund of their deposit, depending on when and why the application is withdrawn. For instance, if the franchisee withdraws after Browns Chicken approves a site, the deposit is not refunded. Conversely, if Browns Chicken terminates the agreement because the franchisee couldn't find a suitable site, a portion of the deposit will be refunded. The agreement also states that it is personal and not transferable, with a potential for extension if mutually agreed upon. The document emphasizes that the prospective franchisee acknowledges having read and understood the Preliminary Agreement and the Franchise Disclosure Document, and has had the opportunity to seek clarification and legal counsel before being bound by its terms.