Under what circumstances would someone sign a Browns Chicken Preliminary Agreement?

According to Browns Chicken's 2025 Franchise Disclosure Document, a prospective franchisee would sign a Preliminary Agreement when applying for a franchise. This agreement outlines the initial steps and conditions before entering into a full franchise agreement. The document emphasizes that the prospective franchisee acknowledges they have read both the Preliminary Agreement and the Franchise Disclosure Document in their entirety, had the opportunity to clarify any unclear provisions, and consulted with an attorney or advisor. By signing, the prospective franchisee represents that they understand and agree to be bound by the terms, conditions, and obligations outlined in the Preliminary Agreement.

Specifically, the Preliminary Agreement addresses the handling of the deposit. If the prospective franchisee withdraws their application after a site has been approved by Browns Chicken, they will not be entitled to a refund of their deposit. If termination occurs before site approval, Browns Chicken will refund the deposit less $3,000 to cover expenses related to the proposed franchise purchase, including site selection, inspection, travel, employee compensation, and legal fees. However, if the termination occurs due to Browns Chicken, the entire deposit will be refunded to the prospective franchisee.

The Preliminary Agreement also clarifies that the prospective franchisee's rights are personal and not transferable. The agreement initially lasts for sixty days but can be extended by mutual agreement. Even after the agreement expires, if the prospective franchisee submits a proposed site within twenty days before the expiration date, the agreement remains in effect until Browns Chicken has a reasonable opportunity to evaluate the site. This ensures that the prospective franchisee is committed to the process and that Browns Chicken is protected for the expenses it incurs during the initial evaluation phase.