Does the imposition of monetary penalties limit Browns Chicken from exercising other remedies for non-compliance?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
wn's financial or other individual interest. Examples of items that will promote or benefit all franchises and the System include but are not limited to enhancing the value of the Marks, improving customer service and satisfaction, improving product quality, improving uniformity, enhancing or encouraging modernization and improving the competitive position of the System.
24. MONETARY PENALTIES FOR NON-COMPLIANCE.
- A. If Franchisee commits any of the defaults described in this Section 24, Brown may impose monetary penalties on Franchisee, in addition to the other remedies set forth in this Section 24 and elsewhere in this Agreement. The imposition of a penalty in no manner limits Brown's right to exercise any other remedy available under this Agreement or in law. Brown will deposit any penalties paid, less its costs to collect them, into the Marketing Fund.
- B. Failure to Report Gross Sales and to Furnish Reports and Financial Statements. Franchisee shall pay Brown a penalty of One Hundred Dollars ($100) per day, beginning on the fifteenth (15th) day from the date performance is due, up through and including the day the default is cured, if he fails to report the Gross Sales of the Store, or to furnish the reports and financial statements, as set forth in Paragraph 12.B. by the stated deadlines.
- C. Failure to Pay Royalty Fees or Advertising Fund contributions. Franchisee shall pay Brown a penalty of One Hundred Dollars ($100) per day, beginning on the fifteenth (15th)
day from the date performance is due, up through and including the day the default is cured, if Franchisee is in default in the payment of the royalty fee required under Paragraph 19.A. or Advertising Fund contribution under Paragraph 11.A.
- D. Failure to Properly Use Proprietary Products. Franchisee shall pay Brown a penalty of One Hundred Dollars ($100) per day for each and every day, beginning with the first day that he fails to properly use Brown's specified recipes and products as described in Paragraph 10.D. of this Agreement and/or as set forth in the Operating Manual.
- E. Failure to Furnish Tax Returns. Franchisee shall pay Brown a penalty of One Hundred Dollars ($100) per day, beginning on the fifteenth (15th) day from the date performance is due, up through and including the day the default is cured, if he fails to furnish the tax returns set forth in Paragraph 12.B. by the stated deadlines.
- F. Failure to Comply with Specific Operating Standards. Franchisee shall pay Brown a penalty of One Hundred Dollars ($100) for each and every day, beginning with the first day up through and including the day the default is cured, that his Store fails to comply with the following specific Operating Standards, as set forth in this Agreement or in the Operating Manual, and of which Brown
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, the imposition of monetary penalties for non-compliance does not limit Browns Chicken's right to exercise other remedies. Specifically, Browns Chicken retains the right to pursue any other remedy available under the Franchise Agreement or in law, even if a monetary penalty is imposed. Any penalties paid by the franchisee, after deducting Browns Chicken's costs to collect them, will be deposited into the Marketing Fund.
Browns Chicken outlines several instances where monetary penalties may be imposed on a franchisee. These include $100 per day penalties for: failure to report gross sales or furnish required reports and financial statements, failure to pay royalty fees or advertising fund contributions, failure to properly use proprietary products, and failure to furnish tax returns.
Additionally, a penalty of $100 per day may be levied if the Browns Chicken store fails to comply with specific operating standards after a 15-day notice period. These standards include employees wearing required uniforms, using approved suppliers, complying with insurance requirements, and always having a trained manager present. The FDD explicitly states that the imposition of this penalty does not limit Browns Chicken from pursuing other remedies available under the agreement or applicable law. This ensures Browns Chicken has multiple avenues to address franchisee non-compliance and protect the brand standards.