If a Browns Chicken franchisee wants to sell their franchise, what must they obtain from a purchaser?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee or its owner shall at any time determine to sell an interest in this Agreement, the Franchise, the Store, the Premises or an ownership interest in Franchisee, Franchisee or its owner shall obtain a bona fide, executed written offer and earnest money deposit (in the amount of five percent (5%) or more of the total offering price) from a responsible and fully disclosed purchaser and shall submit an exact copy of such offer to Brown. Such offer must be limited to such interest in this Agreement, the Franchise, the Store, the Premises or Franchisee, shall not include the purchase of any other property or rights of Franchisee (or its owner). If the offeror proposes to buy any other property or rights from the Franchisee (or its owner) under a separate, contemporaneous offer, the price and terms of purchase offered to Franchisee (or its owner) for such interest in this Agreement, the Franchise, the Store, the Premises or Franchisee shall reflect the bona fide price offered therefor and shall not reflect any value for any other property or rights. Brown shall have the right, exercisable by written notice delivered to Franchisee or its owner within thirty (30) days from the date of delivery of an exact copy of such offer to Brown, to purchase such interest for the price and on the terms and conditions contained in such offer, provided that Brown may substitute cash for any form of payment proposed in such offer. Brown's credit shall be deemed equal to the credit of any proposed purchaser, and Brown shall have not less than thirty (30) days to prepare for closing. Brown shall be entitled to purchase such interest subject to all customary representations and warranties given by the seller of the assets of a business. If Brown does not exercise its right of first refusal, Franchisee or its owner may complete the sale to such purchaser pursuant to and on the terms of such offer, subject to the Brown's approval of the transfer, as provided in Paragraphs B and C of this Section 22, provided that if the sale to such purchaser is not completed within six (6) months after delivery of such offer to Brown, or if there is a material change in the terms of the sale, Brown shall have an additional right of first refusal for thirty (30) days on the same terms and conditions as are applicable to the initial right of first refusal.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, if a franchisee decides to sell their interest in the Franchise Agreement, the franchise, the store, the premises, or an ownership interest in the franchisee, they must first obtain a bona fide, executed written offer from a responsible and fully disclosed purchaser. This offer must also include an earnest money deposit that is at least five percent of the total offering price. The offer must be limited to the specific interest being sold and not include the purchase of any other property or rights of the franchisee. If the offeror proposes to buy any other property or rights from the franchisee, the price and terms of purchase offered to Franchisee shall reflect the bona fide price offered therefor and shall not reflect any value for any other property or rights.
Browns Chicken then has the right of first refusal, meaning they have the option to purchase the franchise on the same terms as the offer received by the franchisee. Browns Chicken has thirty days from the date they receive a copy of the offer to exercise this right by providing written notice. If Browns Chicken matches the offer, they can substitute cash for any proposed form of payment and are given at least thirty days to prepare for closing.
If Browns Chicken declines to exercise their right of first refusal, the franchisee can proceed with the sale to the original purchaser, subject to Browns Chicken's approval of the transfer. However, the sale must be completed within six months of the original offer date. If the sale is not completed within this timeframe or if there are material changes to the terms, Browns Chicken has an additional thirty-day right of first refusal under the same terms and conditions as the initial right.