What is the Browns Chicken franchisee's obligation regarding compliance with the Illinois Video Gaming Act?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
the terms and conditions of this Rider G. | | | In consideration of the mutual and several covenants | | | set forth herein, and for other good and | | | valuable consideration, the receipt and sufficiency of which are hereby acknowledge, the parties | | | hereto agree as follows: | | 1. | Franchisor hereby consents to Franchisee's offering Video Gaming, as that term is | | | defined on attached Schedule "A," at Franchisee's Store, on the terms and conditions of | | | this Rider G. |
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- Franchisee acknowledges that Video Gaming is regulated by the Illinois Video Gaming Act, 230 ILCS 40/1, et seq. ("the Act") and is supervised by the Illinois Gaming Board (the "Board"), as authorized by Section 78 of the Act.
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- Franchisee acknowledges and agrees that Franchisee's Store is considered a "Licensed Establishment" within the meaning of the Act (Section 25(e)), and that Franchisee must comply with all the requirements imposed on Licensed Establishments under the Act and the Board's Adopted Rules and Policies. Franchisee agrees that Franchisee is responsible for retaining its own legal counsel in connection with the Video Gaming activities at Franchisee's Store, and Franchisee is not relying on the legal, business, or operational advice or guidance from Franchisor in connection with Video Gaming.
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- Franchisee acknowledges and understands that under Section 55 of the Act, Franchisee must have a valid liquor license in order to be licensed as a Licensed Establishment. Franchisee shall maintain its liquor license in good standing and shall furnish Franchisor a copy of its liquor license and all renewals.
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- Franchisee shall obtain a license ("State License") as a Licensed Establishment from the Board, as required by Section 45 of the Act, and shall obtain renewals of its State License annually or at such other intervals as required by the Act.
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- Franchisee, if applicable, shall obtain a license or permit ("Municipal License or Permit") from the municipality in which Franchisee's Store is located, to offer Video Gaming, and shall obtain renewals of its Municipal License or Permit annually or at such other intervals as required by said municipality.
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- Franchisee shall furnish Franchisor copies of the State License and Municipal License or Permit within two (2) days of issuance or renewal.
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- Franchisee agrees that its revenues from Video Gaming shall be considered to be "Gross Sales" as that term is defined in Section 19.B. of the Franchise Agreement.
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- Franchisee shall pay Franchisor a royalty fee of ten percent (10%) of Franchisee's gross sales from Video Gaming at Franchisee's Store, in the same manner and at the same time that Franchisee pays the royalty fee required under Section 19.A. of the Franchise Agreement.
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- Franchisee shall pay to the Advertising Fund, four percent (4%) of Franchisee's gross sales from Video Gaming at Franchisee's Store, in the same manner and at the same time that Franchisee pays the Advertising Fund required under Section 11.A. of the Franchise Agreement.
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- Franchisee may not advertise or promote its Video Gaming activities without the prior written consent of Franchisor, which Franchisor may in its sole discretion grant or deny. Advertising or promotions, if approved by Franchisor, must be conducted in accordance with the Act, or any rules, regulations or policies of the Board.
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- Franchisee acknowledges and understands that it is required under Section 25(e) of the Act to enter into a "Use Agreement" between it as the Licensed Establishment and the company ("Terminal Operator") that owns, services, and maintains the Video Gaming Terminals in Franchisee's Store. Franchisee shall furnish a copy of the Use Agreement to Franchisor within two (2) days of its execution.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, if a franchisee chooses to offer video gaming at their establishment, they must comply with the Illinois Video Gaming Act. Browns Chicken franchisees acknowledge that video gaming is regulated by this Act and supervised by the Illinois Gaming Board. The franchisee's store is considered a "Licensed Establishment" under the Act, and the franchisee must adhere to all requirements imposed on such establishments. Browns Chicken franchisees are responsible for securing their own legal counsel regarding video gaming activities and cannot rely on the franchisor for legal, business, or operational advice related to video gaming.
To comply with the Illinois Video Gaming Act, Browns Chicken franchisees must maintain a valid liquor license, as mandated by Section 55 of the Act, and provide copies to the franchisor. They must also obtain and maintain a state license as a Licensed Establishment from the Illinois Gaming Board, as well as any required municipal licenses or permits from their local municipality, providing copies of these to Browns Chicken within two days of issuance or renewal. Franchisees are also obligated to construct a separate gaming area within their store, adhering to Section 58 of the Act, and restrict access to individuals 21 years of age or older, as per Sections 40 and 58 of the Act.
Furthermore, Browns Chicken franchisees must ensure that an owner, manager, or employee over 21 is present and has the gaming area within view during all hours of operation, as required by Section 58 of the Act. They must also maintain an adequate video gaming fund, as determined by the Illinois Gaming Board, in compliance with Section 60(d) of the Act. The revenues generated from video gaming are considered part of the franchisee's "Gross Sales," which impacts royalty payments to Browns Chicken.
Browns Chicken retains the right to terminate the Video Gaming Rider (Rider G) if the franchisee violates any provision of the Act, Rider G, or the Franchise Agreement. In most cases, Browns Chicken will provide a ten-day notice before termination, but termination can be immediate if the franchisee's license as a Licensed Establishment is revoked. If Rider G is terminated, the franchisee must promptly remove all video gaming terminals and cease all video gaming activities at their store. The franchisee must also ensure that any agreement with a terminal operator includes a provision allowing for termination of the agreement under the same conditions.