Is signing a Preliminary Agreement required to obtain a Browns Chicken franchise?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
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Item 5 INITIAL FEES
Except as described below, Brown charges an initial franchise fee of $25,000, $15,000 of which is payable upon execution of the Preliminary Agreement. The balance is due and payable immediately prior to the opening of the Store.
Preliminary Agreement. You may, but are not required to, sign a Preliminary Agreement (attached as Exhibit E) and pay a $15,000 deposit for a Brown's franchise. You would sign it if you do not have a location for a Brown's Store and you want to locate your site prior to the execution of a Franchise Agreement. The Preliminary Agreement gives you a period of 60 days in which to locate a site. If a site is not located and approved within the 60 days, Brown will refund all but $3,000 of the deposit. If you locate a site and sign a Franchise Agreement, the $15,000 deposit will be applied toward the initial franchise fee. If you locate a site and it is approved by Brown within the 60 days but you fail to sign a Franchise Agreement within 10 days of the approval, Brown may terminate the Preliminary Agreement and you will not be entitled to any
Source: Item 5 — INITIAL FEES (FDD page 12)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, signing a Preliminary Agreement is not required to obtain a franchise. However, it is an option available to prospective franchisees under specific circumstances.
The Preliminary Agreement is designed for individuals who want to secure a Browns Chicken franchise but do not yet have a location identified. By signing this agreement and paying a $15,000 deposit, the franchisee gains a 60-day period to locate a suitable site. This deposit is applied towards the initial franchise fee if a Franchise Agreement is signed.
There are financial implications to consider. If a site is not located and approved within the 60-day period, Browns Chicken will refund all but $3,000 of the deposit. However, if a site is approved but the franchisee fails to sign a Franchise Agreement within 10 days of approval, Browns Chicken may terminate the Preliminary Agreement, and the entire $15,000 deposit will be forfeited. The initial franchise fee is $25,000, and the $15,000 deposit will be applied to this fee if the franchisee moves forward with the franchise.