Does Browns Chicken have a right of first refusal to acquire a Browns Chicken franchisee's business?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Agreement | Summary |
|---|---|---|
| (n) Franchisor's right of first refusal to acquire Franchisee’s business | 22G | Franchisee must give Brown 30 days’ notice of terms of proposed sale; Brown may purchase on same terms; Brown's right of first refusal renews if sale to proposed transferee is not consummated within 6 months from date of first notice. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 36–38)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, Browns Chicken does retain a right of first refusal should a franchisee wish to sell their business. Specifically, before a Browns Chicken franchisee can transfer their business to a third party, they must first provide Browns Chicken with 30 days' notice of the proposed sale terms. This gives Browns Chicken the option to purchase the franchise on those same terms.
This right of first refusal is a common practice in franchising, allowing Browns Chicken to maintain control over who enters the system and ensuring that any new franchisee meets their standards. If Browns Chicken declines to exercise its right of first refusal, the franchisee is then free to proceed with the sale to the proposed transferee.
However, the right of first refusal is not indefinite. According to the FDD, if the sale to the proposed transferee is not completed within 6 months from the date of the initial notice to Browns Chicken, the right of first refusal is renewed. This means that if the sale process drags on or falls through, the franchisee would need to provide Browns Chicken with another opportunity to purchase the business before pursuing other potential buyers.