What is the Browns Chicken franchisee's obligation regarding any loss the bank may suffer as a consequence of its actions?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall make payments of the royalty fee, Advertising Fund contributions, and all other payments due Brown through a Bank Draft Plan on a bank account Franchisee is required to establish and maintain for the purpose of making payments to Brown. Franchisee shall execute such documents as may be required from time to time by Brown to permit Brown to withdraw from Franchisee's general operating checking
account the amounts due Brown. The form authorizing the bank draft is attached as Rider C.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
Based on the 2025 Browns Chicken Franchise Disclosure Document, franchisees are required to make payments of royalty fees, advertising fund contributions, and all other payments to Browns Chicken through a Bank Draft Plan. This plan mandates that the franchisee establish and maintain a bank account specifically for making payments to Browns Chicken.
To facilitate this Bank Draft Plan, the franchisee must execute documents that allow Browns Chicken to withdraw the amounts due from the franchisee's general operating checking account. The specific form authorizing the bank draft is included as Rider C in the Franchise Agreement.
However, the FDD does not explicitly state the franchisee's obligation regarding any losses the bank may suffer as a consequence of its actions related to the Bank Draft Plan. A prospective franchisee should seek clarification from Browns Chicken regarding liability and responsibilities related to the bank's potential losses associated with this payment system.