Can a Browns Chicken franchisee change their banking relationships without approval from Brown?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) Franchisee may not make any change in its banking relationships, including any change in the account number of its general operating account, or any change in banks, without Brown's prior written approval.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, a franchisee cannot alter their banking relationships without prior written consent from Browns Chicken. This includes changes to the general operating account number or switching banks. Browns Chicken mandates this control because franchisees are required to participate in an electronic Bank Draft Plan to pay amounts due to Browns Chicken.
Browns Chicken can withdraw funds from the franchisee's account for royalty fees, advertising fund contributions, and overdue invoices for miscellaneous items like equipment or uniforms. If a franchisee fails to submit required reports, Browns Chicken will estimate and withdraw the royalty and advertising fees based on the average sales of the last ten reported weeks, with an additional 10% added if the franchisee fails to report sales for two consecutive weeks.
If an electronic bank draft is declined due to insufficient funds, the franchisee must pay Browns Chicken a $50.00 processing fee and immediately resolve the issue to ensure future drafts are honored. This level of financial control is not uncommon in franchising, as it allows franchisors to ensure consistent and timely payment of fees and maintain brand standards.