What is the 'Interim Term' in the context of a Browns Chicken franchise agreement?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
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).
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to the 2025 Browns Chicken Franchise Disclosure Document, the 'Interim Term' refers to a month-to-month continuation of the franchise agreement after its initial expiration, but only if the franchisee continues to accept the benefits of the agreement and Browns Chicken elects to allow it. This arrangement continues until either party provides written notice of termination.
During the Interim Term, all of the franchisee's obligations remain in full force, as if the original agreement had not expired. Upon termination of the Interim Term, all obligations and restrictions that would normally take effect upon expiration of the agreement then apply.
Financially, Browns Chicken specifies that during the Interim Term, the franchisee is obligated to pay a weekly royalty fee of seven percent (7%) of the store's gross sales. This ensures that Browns Chicken continues to receive compensation while the franchise operates under the Interim Term. This arrangement provides a short-term solution for both parties while they decide on a longer-term agreement or termination.