What does a Browns Chicken franchisee waive regarding UCC Financing Statements?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
As security for payment of all sums due from Franchisee to Brown hereunder and for performance of any and all obligations of Franchisee as set forth in this Franchise Agreement, Franchisee shall and hereby does grant to Brown a continuing security interest in certain property of Franchisee as more particularly described on Rider D to this Franchise Agreement, and Franchisee shall execute a Security Agreement and Financing Statement in substantially the form set forth in Rider D hereto. Franchisee consents to Brown filing a Uniform Commercial Code Financing Statement in the form attached at Rider F hereto against the Collateral described on Rider E. Franchisee shall permit no financing statement or lien to be filed or recorded against the property identified in Rider D hereto other than Brown's lien as described herein. However, Brown will not unreasonably withhold its consent to the filing of a lien against the Collateral by a lender from whom Franchisee obtains financing in connection with the establishment of the franchised business. Brown will in such cases agree to subordinate its lien to that of the lender. Upon Franchisee's failure to perform any term or pay any sum due under this Franchise Agreement, Brown shall have the right, without notice to Franchisee, to take immediate possession of the property identified on Rider D hereto, which Rider D is incorporated herein by this reference.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, franchisees grant Browns Chicken a security interest in their property and consent to the filing of a Uniform Commercial Code (UCC) Financing Statement. Specifically, the franchisee agrees that Browns Chicken can file a UCC Financing Statement against the collateral described on Rider E of the Franchise Agreement.
This means that Browns Chicken has a legal claim on the franchisee's assets, as described in Rider D, which serves as collateral for the franchisee's obligations under the Franchise Agreement. This collateral could include equipment, inventory, and other business assets. The franchisee also agrees not to allow any other liens or financing statements to be filed against this property, except for Browns Chicken's lien.
However, Browns Chicken will not unreasonably withhold consent for the franchisee to obtain financing from a lender for establishing the franchised business. In such cases, Browns Chicken will agree to subordinate its lien to the lender's lien, meaning the lender would have priority in the event of default. This arrangement allows the franchisee to secure necessary financing while still protecting Browns Chicken's interests. Upon failure to perform any term or pay any sum due under this Franchise Agreement, Browns Chicken has the right, without notice to Franchisee, to take immediate possession of the property identified on Rider D.