factual

What is the Browns Chicken franchisor's role in relation to the franchisee offering Video Gaming?

Browns_Chicken Franchise · 2025 FDD

Answer from 2025 FDD Document

re-opening the Restaurant;

(4) To refrain from talking to the media in the event of an outbreak of a food borne illness, and to acknowledge our right to control the information that is shared through the media relating to these circumstances.

Q. Video Gaming.

Brown may require Franchisee to offer video gaming in Franchisee's Store. If Brown requires Franchisee to offer video gaming in Franchisee's Store, the parties will execute Rider G, the Video Gaming Rider, to this Franchise Agreement, the Video Gaming Rider. Franchisee must have a license to sell alcoholic beverages in order to obtain and maintain a video gaming license. Franchisee will be subject to other restrictions, as set forth in Rider G.

In the event Franchisee violates any provision of Rider G or any provision of this Franchise Agreement, Franchisor shall have the right to terminate Rider G. Franchisor shall give Franchisee ten (10) days prior notice of termination of Rider G, unless the violation is the revocation of Franchisee's license as a Licensed Establishment, in which event Franchisor may terminate Rider G immediately effective upon revocation of Franchisee's State License. Franchisee will require that any agreement with a terminal operator regarding video gaming in Franchisee's Store (a "Use Agreement") contain a provision stating that such Use Agreement is subject to termination on ten (10) days prior notice in the event that Franchisee exercises the termination right described herein, unless the violation is the revocation of Franchisee's license as a Licensed Establishment, in which event the Use Agreement will be subject to immediate termination. If Franchisor terminates Rider G, all video gaming terminals and other equipment shall be removed promptly in accordance with the terms of the Use Agreement, and Franchisee shall be prohibited from operating any Video Gaming activities at Franchisee's Store.

R. Best Efforts

Franchisee shall throughout the term of this Agreement faithfully, honestly, and diligently perform his obligations hereunder. Franchisee shall continuously exert his best efforts to promote and enhance the business of the Store and the goodwill of the Marks.

11. ADVERTISING AND PROMOTION.

A. By Company.

Recognizing the value of advertising to the goodwill and public image of BROWN'S Stores, Brown agrees to maintain and administer an advertising fund (the "Advertising Fund") for such advertising as Brown may deem necessary or appropriate, in its sole discretion. Brown shall, from time to time, formulate, develop, produce and conduct regional advertising and promotion programs in such form and media as it determines, in its sole discretion, to be most effective.

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.

Brown shall direct all advertising programs financed by the Advertising Fund, with sole discretion over the creative concepts, materials and endorsements used therein, and the geographic, market and media placement and allocation thereof.

Source: Item 22 — Contracts (FDD page 43)

What This Means (2025 FDD)

According to Browns Chicken's 2025 Franchise Disclosure Document, the franchisor, Browns Chicken, LLC, plays several key roles regarding a franchisee's offering of video gaming. Browns Chicken may require a franchisee to offer video gaming at their store, in which case both parties will execute Rider G, the Video Gaming Rider, to the Franchise Agreement. The franchisee must possess a license to sell alcoholic beverages to obtain and maintain a video gaming license and will be subject to the restrictions outlined in Rider G. Browns Chicken gives conditional consent for the franchisee to offer Video Gaming at the franchisee's store, based on the terms and conditions outlined in Rider G.

Browns Chicken retains the right to terminate Rider G if the franchisee violates any provision within Rider G or the Franchise Agreement. Browns Chicken must provide a ten-day notice before termination, unless the franchisee's license as a Licensed Establishment is revoked, in which case termination is immediate. If Rider G is terminated, the franchisee must promptly remove all video gaming terminals and cease all video gaming activities at the store. The franchisee is required to report the presence of Video Gaming to their insurance carrier and maintain liability insurance in an amount that Browns Chicken deems reasonably necessary. The franchisee must also indemnify Browns Chicken against any claims arising from the video gaming activities at the franchisee's store.

The franchisee is responsible for constructing a separate Gaming Area within the store, compliant with Section 58 of the Act, and restricting access to individuals 21 years or older, as mandated by Sections 40 and 58 of the Act. The franchisee must comply with Section 58 of the Act, ensuring that an owner, manager, or employee over 21 is present during all hours of operation, with the Video Gaming Terminals or entrance to the Gaming Area within their view. Additionally, the franchisee must comply with Section 60(d) of the Act by maintaining an adequate video gaming fund, as determined by the Board. The franchisee's revenues from Video Gaming are considered part of "Gross Sales" as defined in Section 19.B of the Franchise Agreement.

Browns Chicken also maintains certain controls and limitations. The franchisee does not acquire any territorial rights regarding video gaming, meaning Browns Chicken can consent to other franchisees offering video gaming or offer it themselves in other businesses. Browns Chicken's role emphasizes ensuring compliance with the Illinois Video Gaming Act and protecting its interests while allowing franchisees to offer video gaming as an additional service.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.