Does Browns Chicken have a right of first refusal to acquire a 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. |
| Provision | Section in Agreement | Summary |
| (o) Franchisor’s option to purchase Franchisee’s business | 21G | Brown has the right to purchase Franchisee’s assets upon expiration or termination of the Franchise agreement |
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 to acquire a franchisee's business. Specifically, before a franchisee can sell their Browns Chicken franchise to a third party, they must first offer Browns Chicken the opportunity to purchase the business on the same terms.
This right of first refusal is triggered when the franchisee notifies Browns Chicken of a proposed sale. Browns Chicken then has 30 days to decide whether to exercise its right and purchase the franchise under the same terms offered by the third party. If Browns Chicken declines or fails to act within the 30-day period, the franchisee is free to proceed with the sale to the original proposed buyer.
However, this right of first refusal is not indefinite. 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 deal falls through and the franchisee later seeks to sell to a different buyer or on different terms, Browns Chicken's right of first refusal is reinstated, and the franchisee must again offer the business to Browns Chicken before proceeding with the new sale. Browns Chicken also has the option to purchase the franchisee's assets upon expiration or termination of the Franchise agreement.