What happens if Browns Chicken does not exercise its right of first refusal?

According to Browns Chicken's 2025 Franchise Disclosure Document, if a franchisee decides to sell their interest in the franchise, store, premises, or ownership interest, they must first obtain a legitimate written offer along with an earnest money deposit of at least 5% of the total offering price from a fully disclosed purchaser. This offer must be submitted to Browns Chicken. Browns Chicken then has 30 days from the date they receive the offer to exercise their right of first refusal and purchase the franchisee's interest themselves, matching the price and terms of the offer, with the option to substitute cash for any proposed form of payment.

If Browns Chicken chooses not to exercise its right of first refusal, the franchisee is permitted to proceed with the sale to the original purchaser. However, this sale is still subject to Browns Chicken's approval of the transfer, as outlined in Paragraphs B and C of Section 22 of the franchise agreement. This means that even if Browns Chicken declines to buy the franchise themselves, they still retain the right to approve or disapprove of the proposed buyer.

There are specific conditions that apply even after Browns Chicken waives its right of first refusal. The sale to the purchaser must be completed within six months of the original offer being submitted to Browns Chicken. If the sale is not completed within this timeframe, or if there are any material changes to the terms of the sale, Browns Chicken has an additional 30-day right of first refusal under the same terms and conditions as the initial right. This provision ensures that Browns Chicken retains control over potential changes in ownership and the terms of sale, even after initially declining to purchase the franchise.