How are Browns Chicken franchisees' payments to the Advertising Fund made?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall pay to the Advertising Fund, as hereinafter provided, such amount as may be designated by Brown from time to time by written notice to Franchisee, not to exceed four percent (4%) of the Gross Sales (as hereinafter defined) of the Store. The Advertising Fund contribution shall be paid by Franchisee on Gross Sales for each Monday through Sunday weekly period together with the royalty fee as set forth in Paragraph l9.A of this Agreement. Franchisee's payments to the Advertising Fund shall be made by electronic transfer or automatic debit from Franchisee's bank account to the Advertising Fund account, as set forth in Paragraph 19.F. below.
(1) 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.
- (2) In the event Franchisee fails to submit required reports to Brown, Brown will withdraw an estimated amount for the royalty fee and Advertising Fund contribution, based on the average sales for the last ten (10) reported weeks. If Franchisee fails to report sales for two (2) consecutive weeks, Brown will withdraw an estimated amount for the royalty fee and Advertising Fund contribution, based on the average sales, plus ten percent (10%) for the last ten (10) reported weeks.
- (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.
- (4) In the event any electronic bank draft is declined, dishonored, or refused, due to insufficient funds, Franchisee shall pay the Brown a processing fee of Fifty Dollars ($50.00). Franchisee shall also immediately remedy the reason the electronic bank draft was dishonored, and notify Brown that the electronic bank draft will be honored.
- (5) In the event there are other invoices for miscellaneous items due Brown (e.g., equipment, uniform purchasing, product transfers, etc.) over 30 days past due, Brown may withdraw the amounts due from Franchisee's bank account, through Franchisee's Bank Draft Plan.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, franchisees are required to make payments to the Advertising Fund via electronic transfer or automatic debit from their bank account to the Advertising Fund account. The amount franchisees pay into the advertising fund can be up to 4% of gross sales. These payments are made weekly, covering the period from Monday through Sunday, and are submitted together with the royalty fee.
Browns Chicken requires franchisees to establish and maintain a bank account specifically for making payments to the company through a Bank Draft Plan. Franchisees must complete the necessary documentation to allow Browns Chicken to withdraw the required amounts from their operating account. If a franchisee fails to submit the required sales reports, Browns Chicken will estimate the royalty fee and advertising fund contribution based on the average sales of the last ten reported weeks. If sales are not reported for two consecutive weeks, Browns Chicken will add an additional 10% to the estimated amount.
Franchisees must obtain prior written approval from Browns Chicken before making any changes to their banking relationships, including changes to the account number or the bank itself. If an electronic bank draft is declined due to insufficient funds, the franchisee will be charged a $50.00 processing fee and must immediately resolve the issue to ensure the draft is honored. Browns Chicken also reserves the right to withdraw amounts due for other miscellaneous items, such as equipment or uniform purchases, if these invoices are over 30 days past due.
This level of control over payments is common in franchising, as it ensures timely collection of fees and contributions. However, franchisees should be aware of the potential for additional fees and the importance of maintaining accurate and timely reporting to avoid estimated withdrawals. The electronic transfer or automatic debit system simplifies the payment process but also requires franchisees to maintain sufficient funds in their designated bank accounts to avoid penalties.