What is the purpose of the Browns Chicken sublessee depositing funds with the sublessor each month?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
To assure the payment by Sublessee of all real estate, personal property, and other taxes and assessments levied upon or with respect to the Premises during the Term, or any portion thereof, of the Lease or this Sublease and for which Tenant is responsible under the Lease ("Taxes"), and the payment of which is hereby undertaken by Sublessee in accordance with Paragraph 7 hereof, Sublessor may require Sublessee to deposit with Sublessor, on the first day of each month of the Term, an amount equal to one-twelfth (l/12th) of the total of all Taxes, the amount of each monthly payment of Taxes to be established by Sublessor on an annual basis, in such amount as Sublessor determines in its reasonable estimation will provide sufficient reserves from which to satisfy the Taxes next becoming due.
The amount of the monthly deposit for Taxes may be adjusted from time to time by Sublessor in the event of a change in the amount of the Taxes, or in the event Sublessor determines that the funds held by it are (or will be) insufficient for the payment of said Taxes.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to the 2025 Browns Chicken Franchise Disclosure Document, the sublessor may require the sublessee to deposit funds monthly to cover real estate, personal property, and other taxes and assessments related to the premises. These taxes are the responsibility of the tenant under the lease, and the sublessee undertakes the payment of these taxes. The monthly deposit is intended to assure payment of these taxes.
The amount the Browns Chicken sublessee deposits each month is equal to one-twelfth (1/12th) of the total annual taxes. Browns Chicken, as the sublessor, establishes the amount of each monthly tax payment on an annual basis. This amount is determined based on what Browns Chicken reasonably estimates will provide sufficient reserves to cover the taxes when they become due.
The amount of the monthly deposit can be adjusted by Browns Chicken if there is a change in the amount of the taxes or if Browns Chicken determines that the funds held are insufficient to pay the taxes. This ensures that the sublessee is contributing an adequate amount to cover the tax obligations throughout the term of the sublease.
This arrangement protects Browns Chicken from potential tax liabilities related to the property, as the sublessee is responsible for covering these costs. For a prospective Browns Chicken franchisee, this means understanding and budgeting for these monthly tax deposits in addition to the base rent and other operating expenses.