Under what circumstances can Browns Chicken terminate the franchise agreement?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Brown may terminate this Agreement, effective upon delivery of notice of termination to Franchisee, if Franchisee, the Store or the principal owner or owners of the equity or operating control of Franchisee:
- (1) fails to satisfactorily complete the training program as provided in Section 7 hereof;
- (2) fails to lease or purchase an acceptable site for the Premises, develop the Store in accordance with plans and specifications approved by Brown and commence operation of the Store within one hundred eighty (180) days from the date of this Agreement;
- (3) makes an assignment for the benefit of creditors or an admission of his inability to pay its obligations as they become due;
- (4) files a voluntary petition in bankruptcy or any pleading seeking any reorganization, arrangement, composition, adjustment, liquidation, dissolution or similar relief under any law, or admitting or failing to contest the material allegations of any such pleading filed against it, or is adjudicated a bankrupt or insolvent, or a receiver is appointed for a substantial part of the assets of Franchisee or the Store, or the claims of creditors of Franchisee or the Store are abated or subject to a moratorium under any law;
- (5) abandons, surrenders or transfers control of the operation of the Store or fails to continuously and actively operate the Store, unless precluded from doing so by damage to the Premises, war, civil disturbance, natural disaster, labor dispute or other event beyond Franchisee's reasonable control;
- (6) suffers cancellation of or fails to renew or extend the lease or sublease for or otherwise fails to maintain possession of the Premises, unless the Store is relocated with the approval of Brown;
- (7) submits to Brown on two (2) or more separate occasions during the term of the Franchise, a sales report, financial statement or tax return or schedule which understates the Gros
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, Browns Chicken can terminate the franchise agreement if the franchisee, the store, or the principal owner(s) of the equity or operating control of the franchisee meet certain conditions. These conditions include failing to satisfactorily complete the training program, failing to secure an acceptable site and commence operations within 180 days of the agreement, making an assignment for the benefit of creditors, or filing for bankruptcy.
Additional grounds for termination by Browns Chicken include abandoning or transferring control of the store, failing to continuously operate the store (unless due to uncontrollable events), suffering cancellation or failing to renew the lease, or submitting false sales reports, financial statements, or tax returns on two or more occasions. These stipulations ensure that Browns Chicken franchisees meet the brand's operational and financial standards.
These termination rights are typical in franchising, as they protect the brand's reputation and ensure consistent standards across all franchise locations. A prospective Browns Chicken franchisee should carefully review these termination clauses to understand their obligations and the potential consequences of non-compliance. It is also important to note that a default under the Franchise Agreement also constitutes a default under any and all other agreements between Browns Chicken and the Franchisee.