Can the Browns Chicken Sublessee change their banking relationships without approval?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
sing Fund contribution, based on the average sales for the last ten (10) reported weeks. If Franchisee fails to report sales for two (2) consecutive weeks, Brown will withdraw an estimated amount for the royalty fee and Advertising Fund contribution, based on the average sales, plus ten percent (10%) for the last ten (10) reported weeks.
- (3) Franchisee may not make any change in its banking relationships, including any change in the account number of its general operating account, or any change in banks, without Brown's prior written approval.
- (4) In the event any electronic bank draft is declined, dishonored, or refused, due to insufficient funds, Franchisee shall pay the Brown a processing fee of Fifty Dollars ($50.00). Franchisee shall also immediately remedy the reason the electronic bank draft was disho
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, a franchisee is not allowed to make any changes to their banking relationships without prior written approval from Browns Chicken. This includes changes to the account number of their general operating account or changing banks altogether.
This requirement allows Browns Chicken to maintain control over financial transactions and ensure the proper collection of royalties and advertising fees. Browns Chicken uses a bank draft authorization form to manage these payments, as detailed in Rider C of the franchise agreement. If a franchisee fails to submit required reports, Browns Chicken can withdraw an estimated amount for royalty fees and advertising fund contributions based on the average sales of the last ten reported weeks, with an additional 10% added if the franchisee fails to report sales for two consecutive weeks.
If an electronic bank draft is declined due to insufficient funds, the franchisee must pay Browns Chicken a processing fee of $50.00 and immediately resolve the issue to ensure future drafts are honored. Browns Chicken also reserves the right to withdraw amounts due for miscellaneous invoices, such as equipment or uniform purchases, if they are over 30 days past due. This level of financial oversight is common in franchising, as it protects the franchisor's revenue stream and ensures brand consistency.
Therefore, a prospective Browns Chicken franchisee needs to be aware that they cannot independently alter their banking arrangements. They must obtain written consent from Browns Chicken before making any changes to their bank accounts or banking relationships. This requirement is in place to safeguard Browns Chicken's financial interests and maintain operational control.