What royalty fee is a Browns Chicken franchisee obligated to pay weekly during the Interim Term?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event Franchisee does not execute the Renewal Franchise Agreement after the expiration of the term of the Franchise, and continues to accept any of the benefits of this Agreement after the expiration of the term of the Franchise, then at Brown's option, this Agreement may be treated either as: (i) expired as of the date of the expiration with
Franchisee then operating without a franchise to do so and in violation of Brown's right; or (ii) continued on a month-to-month basis (the "Interim Term") until either party provides the other party with written notice of such party's intention to terminate the Interim Term. In the latter case, all of Franchisee's obligations shall remain in full force and effect during the Interim Term as if this Agreement had not expired, and all obligations and restrictions imposed on Franchisee upon expiration of this Agreement shall be deemed to take effect upon termination of the Interim Term. In the event of either (i) or (ii) of this Paragraph, Franchisee shall be obligated to pay a weekly royalty fee in the amount of seven percent (7%) of the Gross Sales of the Store (as defined in Paragraph 19.B. hereof).
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to the 2025 Browns Chicken Franchise Disclosure Document, if a franchisee continues to operate after the franchise term expires without signing a Renewal Franchise Agreement, Browns Chicken may consider this an "Interim Term." During this Interim Term, all of the franchisee's obligations remain in effect as if the agreement had not expired. Specifically, the franchisee is obligated to pay a weekly royalty fee of seven percent (7%) of the Gross Sales of the Store.
This royalty fee is higher than the standard royalty fee outlined in Paragraph 19.A, which is five percent (5%) of Gross Sales (or ten percent (10%) for revenue from Video Gaming). The increased royalty fee during the Interim Term could significantly impact a franchisee's profitability if they continue operations without renewing the agreement.
It is crucial for prospective Browns Chicken franchisees to understand the implications of operating under an Interim Term and the associated increase in royalty fees. Franchisees should carefully consider their options upon the expiration of their franchise term, including negotiating a renewal agreement or discontinuing operations to avoid the higher royalty fee.