What payments are Browns Chicken franchisees obligated to make?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
end credit to, or otherwise finance Franchisee's operation of, the Store. Further, Franchisee acknowledges that his failure to pay all such amounts when due shall constitute grounds for termination of this Agreement, as provided in Section 20 hereof, notwithstanding the provisions of this Paragraph.
D. Application of Payments.
Notwithstanding any designation by Franchisee, Brown shall have sole discretion to apply any payments by Franchisee to any past due indebtedness of Franchisee for royalty fees, advertising contributions, purchases from Brown or its affiliates, interest or any other indebtedness.
E. Expenses of Enforcement.
Franchisee shall be obligated to reimburse Brown for Brown's costs and expenses (including attorneys' fees) incurred by Brown in the enforcement by Brown of the provisions of this Agreement as a consequence of Franchisee's failure to perform same.
F. Bank Draft Plan.
(1) Franchisee shall make payments of the royalty fee, Advertising Fund contributions, and all other payments due Brown through a Bank Draft Plan on a bank account Franchisee is required to establish and maintain for the purpose of making payments to Brown. Franchisee shall execute such documents as may be required from time to time by Brown to permit Brown to withdraw from Franchisee's general operating checking
account the amounts due Brown. The form authorizing the bank draft is attached as Rider C.
- (2) In the event Franchisee fails to submit required reports to Brown, Brown will withdraw an estimated amount for the royalty fee and Advertising Fund contribution, based on the average sales for the last ten (10) reported weeks. If Franchisee fails to report sales for two (2) consecutive weeks, Brown will withdraw an estimated amount for the royalty fee and Advertising Fund contribution, based on the average sales, plus ten percent (10%) for the last ten (10) reported weeks.
- (3) Franchisee may not make any change in its banking relationships, including any change in the account number of its general operating account, or any change in banks, without Brown's prior written approval.
- (4) In the event any electronic bank draft is declined, dishonored, or refused, due to insufficient funds, Franchisee shall pay the Brown a processing fee of Fifty Dollars ($50.00).
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to the 2025 Browns Chicken Franchise Disclosure Document, franchisees are obligated to make several payments to Browns Chicken. These include royalty fees, advertising fund contributions, and any other payments due to Browns Chicken. Browns Chicken has the sole discretion to apply any payments made by the franchisee to any past due debts, such as royalty fees, advertising contributions, purchases from Browns Chicken or its affiliates, interest, or any other outstanding debt. Franchisees must make these payments through a Bank Draft Plan, which involves authorizing Browns Chicken to withdraw the amounts due from the franchisee's bank account.
In the event that a Browns Chicken franchisee fails to perform their obligations under the Franchise Agreement, they will be responsible for reimbursing Browns Chicken for all costs and expenses incurred in enforcing the agreement, including attorney's fees. Additionally, if a franchisee transfers their franchise and the transferee had prior contact with Browns Chicken regarding a franchise opportunity, the franchisee must pay Browns Chicken a sum equal to 10% of the gross sales price of the transaction, in addition to the $5,000 transfer fee. However, this sum will not exceed the then-current initial franchise fee.
Furthermore, a transferee must submit a Marketing Deposit of $1,000, which will be used in the same manner as the Marketing Deposit described in Paragraph 11.B(1), with the date the store re-opens replacing the date the store opens. These financial obligations are critical for prospective franchisees to understand, as they represent ongoing costs and potential additional expenses that can significantly impact profitability and financial stability.