What is the purpose of Rider B in the Browns Chicken franchise agreement?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall execute a Collateral Assignment of Lease, attached hereto as Rider B, by which Franchisee assigns to Brown all of his right, title and interest as tenant under the lease for the Store premises. The assignment is for collateral purposes and may be exercised only upon a default by Franchisee under his lease or under this Agreement. Brown's approval of Franchisee's lease is conditioned on receipt of the signed Collateral Assignment.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to the 2025 Browns Chicken Franchise Disclosure Document, Rider B pertains to the Collateral Assignment of Lease. This assignment involves the franchisee assigning all rights, title, and interest as a tenant under the lease for the store premises to Browns Chicken. However, this assignment is strictly for collateral purposes.
This means that Browns Chicken can only exercise its rights under the Collateral Assignment of Lease if the franchisee defaults on their lease obligations or under the Franchise Agreement itself. Browns Chicken's approval of the franchisee's lease is contingent upon receiving this signed Collateral Assignment, ensuring that Browns Chicken has a security interest in the lease.
This arrangement protects Browns Chicken by giving them a way to control the premises if the franchisee fails to meet their obligations. It also ensures that Browns Chicken has some recourse if the franchisee's store lease is terminated due to the franchisee's actions or inactions. The franchisee must provide a copy of the signed lease to Browns Chicken within 15 days of its execution, further emphasizing the importance of this document in the franchising relationship.