factual

What is the maximum training fee that Browns Chicken may charge for a franchise transfer?

Browns_Chicken Franchise · 2025 FDD

Answer from 2025 FDD Document

is Paragraph. The proposed transferee or its owner must be an individual of good moral character, must not be engaged in any activity which would be prohibited by Section 15 of this Agreement, and otherwise meet Brown's then applicable standards for Brown's franchisees. A transfer of ownership in the Store may be made only in conjunction with a transfer of the Franchise. If the transfer is of the Franchise or a controlling interest in Franchisee, or is one of a series of transfers which in the aggregate constitute the transfer of the Franchise or a controlling interest in Franchisee, all of the following conditions must be met prior to or concurrently with, the effective date of the transfer: (1) the transferee must have sufficient business experience, aptitude and financial resources to operate the Store; (2) Franchisee must pay such royalty fees, advertising contributions, amounts owed for purchases by Franchisee from Brown and its affiliates and all other amounts owed to Brown or its affiliates, which are then due and unpaid; (3) the transferee and/or its personnel must agree to complete Brown's training to Brown's satisfaction; (4) the transferee must agree to execute and be bound by all terms and conditions of Brown's then-current form of standard franchise agreement (which shall be modified as necessary to provide for the same royalty fees and advertising contributions provided herein and for a term equal to the remaining term of this Agreement); (5) if Brown determines that training is required, Brown may charge Franchisee or the transferee a training fee in an amount equal to twenty percent (20%) of the initial franchise fee then customarily charged by Brown for Brown's franchises; (6) Franchisee or the transferee must pay Brown a transfer fee in the amount of Five Thousand Dollars ($5,000); (7) Franchisee and its owners must execute a general release, in form satisfactory to Brown, of any and all claims against Brown, its affiliates and their officers, directors, employees and agents; (8) Brown must approve the material terms and conditions of such transfer, including, without limitation, that the price and terms of payment are not so burdensome as to adversely affect the operation of the Store by the transferee; (9) if Franchisee finances any part of the sale price of the transferred interest, Franchisee and its owners agree that all obligations of the transferee under or pursuant to any promissory notes, agreements or security interests reserved by Franchisee or its owners in the assets of the Store or the Premises shall be subordinate to: (a) the obligations of the transferee to pay royalty fees, advertising contributions and other amounts due to Brown and its affiliates, and otherwise to comply with this Agreement or the franchise agreement executed by the transferee; and (b) the collateral security interest of Brown in the lease of the Premises;

Source: Item 22 — Contracts (FDD page 43)

What This Means (2025 FDD)

According to Browns Chicken's 2025 Franchise Disclosure Document, if a franchise transfer occurs and Browns Chicken determines that training is required for the transferee, Browns Chicken may charge a training fee. This fee is capped at twenty percent (20%) of the initial franchise fee that Browns Chicken then customarily charges for new franchises.

To illustrate, if Browns Chicken's current initial franchise fee is $25,000 (as stated elsewhere in the document), the maximum training fee for a transfer would be $5,000 (20% of $25,000). This fee covers the costs associated with training the new franchisee or their personnel to ensure they meet Browns Chicken's standards.

However, this training fee may not apply in all transfer scenarios. Specifically, if the transfer is among existing owners of the franchisee or to immediate family members, this training fee requirement does not apply. This exception provides some flexibility for internal transfers within a family-owned or closely-held Browns Chicken franchise.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.