When Browns Chicken purchases a Browns Chicken franchise, is Browns Chicken required to purchase all tangible assets?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
. Continuing Obligations.**
All obligations of Brown and Franchisee which expressly or by their nature survive the expiration or termination of this Agreement shall continue in full force and effect subsequent to and notwithstanding its expiration or termination and until they are satisfied in full or by their nature expire.
G. Brown's Option to Purchase.
(1) If this Agreement expires (without renewal) or is terminated by Brown in accordance with its provisions or by Franchisee without cause, then Brown shall have the option, exercisable by giving written notice thereof within sixty (60) days from the date of such expiration or termination, to purchase from Franchisee any or all the tangible assets (including, without limitation, inventory of saleable products, equipment, fixtures, furniture, signs, cash registers, modems, fax machines, computers, leasehold improvements and any other assets of the Store owned by Franchisee, but excluding any unamortized portion of the initial franchise fee, cash, goodwill, short-term investments and accounts receivable) of the Store (collectively, the "Purchased Assets") and to an assignment of Franchisee's lease for (a) the premises of the Store (or, if an assignment is prohibited, a sublease for the full remaining term and on the same terms and conditions as Franchisee's lease) and (b) any other tangible assets used in connection with the Store.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to the 2025 Browns Chicken Franchise Disclosure Document, Browns Chicken does not have to purchase all tangible assets of a Browns Chicken franchise. If the franchise agreement expires without renewal, or is terminated either by Browns Chicken according to the agreement's terms or by the franchisee without cause, Browns Chicken has the option to purchase some or all of the tangible assets of the store.
Browns Chicken can exercise this option by providing written notice within 60 days of the expiration or termination date. The assets Browns Chicken may purchase include inventory of saleable products, equipment, fixtures, furniture, signs, cash registers, modems, fax machines, computers, leasehold improvements, and any other assets of the store owned by the franchisee. However, this excludes the unamortized portion of the initial franchise fee, cash, goodwill, short-term investments, and accounts receivable.
Browns Chicken has the discretion to exclude items from the purchase if they determine these items are not reasonably necessary for the store's operation or do not meet Browns Chicken's standards. The purchase price will be adjusted to reflect these exclusions. Browns Chicken also retains the right to assign this purchase option to another party.
This clause protects Browns Chicken by allowing them to maintain control over the franchise locations and assets, ensuring consistent standards and operations even after a franchise agreement ends. For a franchisee, this means they may be required to sell certain assets back to Browns Chicken under specific conditions, but they also retain ownership of certain intangible assets and are not obligated to sell assets deemed unnecessary by Browns Chicken.