How much is the deposit required for the Browns Chicken Preliminary Agreement?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
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Item 5 INITIAL FEES
Except as described below, Brown charges an initial franchise fee of $25,000, $15,000 of which is payable upon execution of the Preliminary Agreement. The balance is due and payable immediately prior to the opening of the Store.
Preliminary Agreement. You may, but are not required to, sign a Preliminary Agreement (attached as Exhibit E) and pay a $15,000 deposit for a Brown's franchise. You would sign it if you do not have a location for a Brown's Store and you want to locate your site prior to the execution of a Franchise Agreement. The Preliminary Agreement gives you a period of 60 days in which to locate a site. If a site is not located and approved within the 60 days, Brown will refund all but $3,000 of the deposit. If you locate a site and sign a Franchise Agreement, the $15,000 deposit will be applied toward the initial franchise fee. If you locate a site and it is approved by Brown within the 60 days but you fail to sign a Franchise Agreement within 10 days of the approval, Brown may terminate the Preliminary Agreement and you will not be entitled to any
Source: Item 5 — INITIAL FEES (FDD page 12)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, a deposit of $15,000 is required when signing the Preliminary Agreement. This deposit is part of the initial franchise fee of $25,000. The Preliminary Agreement, which is optional, is typically signed when a prospective franchisee needs to secure a location for their Browns Chicken store before finalizing the Franchise Agreement.
The Preliminary Agreement grants the franchisee a 60-day period to find a suitable site. If a site is not located and approved within this timeframe, Browns Chicken will refund the deposit, less $3,000. However, if a site is approved within the 60 days, but the franchisee fails to sign the Franchise Agreement within 10 days of approval, Browns Chicken may terminate the Preliminary Agreement, and the franchisee will not be entitled to any refund of the $15,000 deposit.
It's important to note that if a franchisee successfully locates a site and proceeds to sign a Franchise Agreement, the $15,000 deposit will be credited towards the initial franchise fee. This deposit structure is designed to compensate Browns Chicken for expenses incurred during the site selection process and to ensure the franchisee's commitment to the process.