Can the Browns Chicken sublessor adjust the amount of the monthly deposit for Taxes?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
To assure the payment by Sublessee of all real estate, personal property, and other taxes and assessments levied upon or with respect to the Premises during the Term, or any portion thereof, of the Lease or this Sublease and for which Tenant is responsible under the Lease ("Taxes"), and the payment of which is hereby undertaken by Sublessee in accordance with Paragraph 7 hereof, Sublessor may require Sublessee to deposit with Sublessor, on the first day of each month of the Term, an amount equal to one-twelfth (l/12th) of the total of all Taxes, the amount of each monthly payment of Taxes to be established by Sublessor on an annual basis, in such amount as Sublessor determines in its reasonable estimation will provide sufficient reserves from which to satisfy the Taxes next becoming due.
The amount of the monthly deposit for Taxes may be adjusted from time to time by Sublessor in the event of a change in the amount of the Taxes, or in the event Sublessor determines that the funds held by it are (or will be) insufficient for the payment of said Taxes.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, the sublessor has the ability to adjust the monthly tax deposit under certain conditions. The sublessor may require the sublessee to deposit, on the first day of each month, an amount equal to one-twelfth of the total annual taxes. This amount is initially established by the sublessor on an annual basis, based on their reasonable estimation of the taxes due.
The FDD specifies that the Browns Chicken sublessor can adjust the amount of the monthly tax deposit if there is a change in the amount of the taxes. Additionally, the sublessor can make adjustments if they determine that the funds they are holding are, or will be, insufficient to cover the upcoming tax payments.
For a prospective Browns Chicken franchisee, this means that the monthly tax deposit is not a fixed amount and can fluctuate based on changes in property taxes or the sublessor's assessment of the funds needed. It is important for franchisees to budget for potential increases in these deposits and to maintain open communication with the sublessor to understand any adjustments.