Under what circumstances will Browns Chicken impose liquidated damages of $10,000?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
the right pending the closing of such purchase to appoint a manager to maintain the operation of the Store in accordance with the relevant provisions of Paragraph 10.I. hereof. Alternatively, Brown may require Franchisee to close the Store during such time period without removing any assets of the Store.
H. Liquidated Damages for Specific Events of Breach.
In the event Franchisee (i) abandons the Store, which for purposes of this Section is failing to open or operate the Store for more than three (3) consecutive days, or (ii) transfers an interest in the Store or the ownership of Franchisee or of the assets of Franchisee or the Store (or any interest therein) without fully complying with Paragraph 22.C. of this Agreement, whether or not Brown terminates this Agreement, Brow
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, Browns Chicken has the right to impose liquidated damages of $10,000 if the franchisee abandons the store, defined as failing to open or operate the store for more than three consecutive days. Additionally, Browns Chicken can impose the same liquidated damages if the franchisee transfers an interest in the store, the ownership of the franchisee, or the assets of the franchisee or the store without fully complying with the agreement's transfer conditions.
These liquidated damages are in addition to any other rights and remedies Browns Chicken may have under the franchise agreement. The FDD explicitly states that these damages are not considered a penalty or forfeiture but are intended as a reasonable measure of damages, especially in situations where determining the exact amount of actual damages would be difficult.
For a prospective Browns Chicken franchisee, this means that strict adherence to the operating schedule and transfer protocols is crucial. Abandoning the store, even for a short period, or attempting to transfer ownership without proper authorization can result in a significant financial penalty. This provision underscores the importance of maintaining consistent operation and seeking franchisor approval for any ownership changes to avoid incurring these liquidated damages.