When a Browns Chicken franchisee receives an offer, what must the offer be limited to?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee or its owner shall at any time determine to sell an interest in this Agreement, the Franchise, the Store, the Premises or an ownership interest in Franchisee, Franchisee or its owner shall obtain a bona fide, executed written offer and earnest money deposit (in the amount of five percent (5%) or more of the total offering price) from a responsible and fully disclosed purchaser and shall submit an exact copy of such offer to Brown. Such offer must be limited to such interest in this Agreement, the Franchise, the Store, the Premises or Franchisee, shall not include the purchase of any other property or rights of Franchisee (or its owner). If the offeror proposes to buy any other property or rights from the Franchisee (or its owner) under a separate, contemporaneous offer, the price and terms of purchase offered to Franchisee (or its owner) for such interest in this Agreement, the Franchise, the Store, the Premises or Franchisee shall reflect the bona fide price offered therefor and shall not reflect any value for any other property or rights. Brown shall have the right, exercisable by written notice delivered to Franchisee or its owner within thirty (30) days from the date of delivery of an exact copy of such offer to Brown, to purchase such interest for the price and on the terms and conditions contained in such offer, provided that Brown may substitute cash for any form of payment proposed in such offer. Brown's credit shall be deemed equal to the credit of any proposed purchaser, and Brown shall have not less than thirty (30) days to prepare for closing. Brown shall be entitled to purchase such interest subject to all customary representations and warranties given by the seller of the assets of a business. If Brown does not exercise its right of first refusal, Franchisee or its owner may complete the sale to such purchaser pursuant to and on the terms of such offer, subject to the Brown's approval of the transfer, as provided in Paragraphs B and C of this Section 22, provided that if the sale to such purchaser is not completed within six (6) months after delivery of such offer to Brown, or if there is a material change in the terms of the sale, Brown shall have an additional right of first refusal for thirty (30) days on the same terms and conditions as are applicable to the initial right of first refusal.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, if a franchisee decides to sell their interest in the franchise, the offer they receive must be limited to specific aspects of the business. The offer must pertain only to the interest in the Franchise Agreement, the franchise itself, the store, the premises, or the franchisee's ownership interest.
This means a potential buyer's offer should not include the purchase of any other property or rights owned by the franchisee (or its owner) outside of the Browns Chicken franchise. If the potential buyer proposes to buy other assets in a separate offer, the price for the Browns Chicken assets must reflect their true value and not be inflated by the value of these other assets.
Browns Chicken retains the right of first refusal, allowing them to purchase the franchise interest on the same terms and conditions as the offer received by the franchisee. This ensures that Browns Chicken has control over who enters their franchise system and maintains brand consistency. The franchisor has 30 days to exercise this right.