What happens if the Browns Chicken Franchise Agreement expires without renewal?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
ce to Franchisee of Brown's refusal to grant a successor franchise as required under this Agreement or under applicable law.
(5) Franchisee's Continued Operation Subsequent to Expiration
In the event Franchisee does not execute the Renewal Franchise Agreement after the expiration of the term of the Franchise, and continues to accept any of the benefits of this Agreement after the expiration of the term of the Franchise, then at Brown's option, this Agreement may be treated either as: (i) expired as of the date of the expiration with
Franchisee then operating without a franchise to do so and in violation of Brown's right; or (ii) continued on a month-to-month basis (the "Interim Term") until either party provides the other party with written notice of such party's intention to terminate the Interim Term. In the latter case, all of Franchisee's obligations shall remain in full force and effect during the Interim Term as if this Agreement had not expired, and all obligations and restrictions imposed on Franchisee upon expiration of this Agreement shall be deemed to take effect upon termination of the Interim Term. In the event of either (i) or (ii) of this Paragraph, Franchisee shall be obligated to pay a weekly royalty fee in the amount of seven percent (7%) of the Gross Sales of the Store (as defined in Paragraph 19.B. hereof).
3. FRANCHISEE'S TERRITORY.
A. Exclusive Territorial Rights.
Before this Agreement is executed, Brown will describe the "Territory" in Rider A, which is a geographic area that is within a 5-mile radius (as the crow flies) of the Premises. Except as limited by Paragraph B below, and provided that Franchisee is in full compliance with this Agreement, Brown and its Affiliates will not operate or grant a franchise for the operation of another BROWN'S Store at a location within the Territory during the term of this Agreement.
If Franchisee's Store is in a shopping mall food court, Franchisee will not have an exclusive territory.
B. Rights Retained by Brown.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, if a franchisee does not execute a Renewal Franchise Agreement after the expiration of the franchise term but continues to accept benefits from the agreement, Browns Chicken has the option to treat the agreement as either expired or continued on a month-to-month basis, referred to as the "Interim Term".
If Browns Chicken treats the agreement as expired, the franchisee operates without a franchise and violates Browns Chicken's rights. Alternatively, if Browns Chicken opts for the Interim Term, the agreement continues month-to-month until either party provides written notice of termination. During this Interim Term, all franchisee obligations remain in full effect as if the agreement had not expired, and restrictions imposed upon expiration take effect upon termination of the Interim Term.
In either scenario, whether the agreement is treated as expired or continues on an Interim Term, the franchisee is obligated to pay a weekly royalty fee of seven percent (7%) of the store's gross sales. Furthermore, if the Franchise expires, is not renewed, or is terminated early for any reason, the franchisee is restricted from engaging in a similar retail food service business featuring cooked chicken, pasta, or sandwiches within five miles of the Browns Chicken store or any other Browns Chicken store for a period of eighteen months.