Is Browns Chicken required to pay separate consideration for the assignment or sublease of the premises of a Browns Chicken franchise?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
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"In the event the Lessee does not exercise any options or rights to renew or extend the Lease, Lessor shall give Brown's Chicken, LLC notice of such failure by Lessee to exercise such options or rights."
Franchisee shall not assign or in any manner transfer the lease or sublease, as the case may be, for the Premises or any interest therein (except in connection with an assignment or transfer of the Franchise or ownership of Franchisee approved by Brown as provided in Section 22), or further sublet the Premises or any part or parts thereof, nor permit occupancy by anyone with, through, or under Franchisee.
Franchisee shall not execute a lease which has for any reason been disapproved by Brown. Franchisee shall deliver a copy of the signed lease for the Premises to Brown within fifteen (15) days of its execution. 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.
Franchisee's execution of a lease for a site for the Store shall constitute acceptance by Franchisee of such site and location and of the terms of such lease, sublease or purchase.
Brown's approval of the lease or sublease does not constitute a warranty or representation of any kind, express or implied, as to its fairness, suitability or profitability or as to Franchisee's ability to comply with its terms.
B. Lease/Leaseback of Premises.
In the event Franchisee either presently owns, or hereafter acquires title to, the real estate on which the Premises are located, Brown has the right to require Franchisee to enter into a lease with Brown. Brown will then sublease the Premises back to Franchisee upon the same terms and
conditions as the lease. So long as Franchisee is in compliance with this Franchise Agreement, Brown will continue to sublease Franchisee the Premises. In the event Franchisee defaults under the Franchise Agreement, Brown has the right to terminate the sublease and take possession of the Premises or sublease them to another party.
**C.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, if the lessor of the premises requires consent for the assignment or sublease of the premises to the proposed transferee, this consent must be obtained. The franchisee cannot assign or transfer the lease or sublease without Browns Chicken's approval, except when transferring the franchise itself. Browns Chicken must also approve any lease before it is executed, and the franchisee must provide a copy of the signed lease within 15 days of signing. A Collateral Assignment of Lease must be executed, assigning the franchisee's rights as tenant to Browns Chicken, which can be exercised upon default. Browns Chicken's approval of a lease does not constitute a warranty regarding its fairness, suitability, or profitability.
In the event that the franchisee either owns or later acquires the real estate where the premises are located, Browns Chicken has the right to require the franchisee to enter into a lease with them. Browns Chicken will then sublease the premises back to the franchisee under the same terms and conditions as the lease, as long as the franchisee complies with the Franchise Agreement. If the franchisee defaults, Browns Chicken can terminate the sublease and take possession of the premises or sublease them to another party.
Upon termination or expiration of the franchise, unless terminated by the franchisee for cause, any sublease from Browns Chicken to the franchisee for the premises will automatically terminate. If the franchisee is the lessee, Browns Chicken has the right to require the franchisee to assign the lease to Browns Chicken or their designee. These provisions ensure Browns Chicken maintains control over the location and premises of its franchises, protecting its brand and operational consistency.