Does the termination of the franchise agreement automatically terminate the Browns Chicken sublease?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon termination or expiration of the Franchise, unless the Franchise is terminated by Franchisee for cause, the sublease from Brown to the Franchisee, if any, for the Premises of the Store, shall automatically terminate, or if Franchisee is the lessee of the Premises, Brown shall have the right to require Franchisee to assign its lease for the Premises to Brown or Brown's designee.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, the termination of the franchise agreement can automatically terminate the sublease under specific conditions. If Browns Chicken terminates the franchise agreement, or if the franchisee terminates the agreement without a valid cause, the sublease from Browns Chicken to the franchisee for the store premises will automatically terminate.
However, if the franchisee terminates the franchise agreement due to a valid cause (such as Browns Chicken materially breaching the agreement and failing to cure it within a specified timeframe), the sublease may not automatically terminate. In such cases, the terms of the sublease agreement itself would govern the termination conditions.
It is important for a prospective Browns Chicken franchisee to understand the circumstances under which the sublease can be terminated, as losing the right to occupy the premises can have significant implications for the business. Additionally, if the franchisee owns the lease, Browns Chicken has the right to require the franchisee to assign the lease to them or their designee upon termination of the franchise agreement.