When can the lease of a Browns Chicken franchise be assigned to Brown's at Brown's option?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
If you lease the premises of the Store, you must obtain Brown's prior consent to the lease terms. The lease must provide that: (1) Brown will receive notice of any default not less than 10 days prior to the commencement of any action to evict you from the Premises; (2) Brown will have, at its option, 10 days after receipt of notice to cure such default and be substituted for you as lessee under the lease; and (3) the lease shall be assigned to Brown, at Brown's option, upon the termination of the Franchise Agreement by Brown in accordance with its terms, or by you without cause as provided in Paragraph A of Section 20 of the Franchise Agreement. You must sign and have the lessor sign the Collateral Assignment of Lease attached to the Franchise Agreement as Rider B.
You must furnish Brown a copy of the signed lease for your Store's premises within 10 days after it is signed.
If you own the real estate on which the Store is located, we have the right to require you to enter into a lease with Brown. Brown will then sublease the Premises back to you upon the same terms and conditions as the lease. So long as you are in compliance with your Franchise Agreement, Brown will continue to sublease you the Premises. If you default under your Franchise Agreement, Brown has the right to terminate the sublease and take possession of the Premises or sublease them to another party.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–22)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, if a franchisee leases the premises for their Browns Chicken store, the lease agreement must include a clause allowing the lease to be assigned to Browns Chicken at Brown's option under specific circumstances. This assignment can occur upon the termination of the Franchise Agreement by Browns Chicken in accordance with its terms. It can also occur if the franchisee terminates the Franchise Agreement without cause, as outlined in Paragraph A of Section 20 of the Franchise Agreement. To ensure this, the franchisee is required to sign and have the lessor sign a Collateral Assignment of Lease, which is attached to the Franchise Agreement as Rider B. Browns Chicken also requires a copy of the signed lease for the store's premises within 10 days after it is signed.
This provision protects Browns Chicken's interest in maintaining the location for continued operation as a Browns Chicken franchise. By securing the right to assume the lease, Browns Chicken can prevent a franchisee from potentially disrupting the business by vacating a valuable location, especially if the franchisee is terminated for poor performance or non-compliance with the franchise agreement. This also allows Browns Chicken to ensure business continuity at that location by either operating it themselves or transferring the lease to a new franchisee.
For a prospective Browns Chicken franchisee, this means that the lease agreement is not solely between the franchisee and the lessor. Browns Chicken has a vested interest and certain rights related to the lease. Therefore, it is crucial for the franchisee to carefully review the lease terms and the Collateral Assignment of Lease with both the franchisor and legal counsel to fully understand the implications of this clause. The franchisee should be aware that Browns Chicken has the power to step in and take over the lease under the conditions specified in the Franchise Agreement.
It is also important to note that if the franchisee owns the real estate on which the Browns Chicken store is located, Browns Chicken has the right to require the franchisee to enter into a lease with Browns Chicken, who will then sublease the premises back to the franchisee under the same terms and conditions as the lease. If the franchisee defaults under the Franchise Agreement, Browns Chicken has the right to terminate the sublease and take possession of the premises or sublease them to another party.