Under what conditions can Browns Chicken be substituted as the lessee under a Browns Chicken franchisee's lease?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
If you lease the premises of the Store, you must obtain Brown's prior consent to the lease terms. The lease must provide that: (1) Brown will receive notice of any default not less than 10 days prior to the commencement of any action to evict you from the Premises; (2) Brown will have, at its option, 10 days after receipt of notice to cure such default and be substituted for you as lessee under the lease; and (3) the lease shall be assigned to Brown, at Brown's option, upon the termination of the Franchise Agreement by Brown in accordance with its terms, or by you without cause as provided in Paragraph A of Section 20 of the Franchise Agreement. You must sign and have the lessor sign the Collateral Assignment of Lease attached to the Franchise Agreement as Rider B.
You must furnish Brown a copy of the signed lease for your Store's premises within 10 days after it is signed.
If you own the real estate on which the Store is located, we have the right to require you to enter into a lease with Brown. Brown will then sublease the Premises back to you upon the same terms and conditions as the lease. So long as you are in compliance with your Franchise Agreement, Brown will continue to sublease you the Premises. If you default under your Franchise Agreement, Brown has the right to terminate the sublease and take possession of the Premises or sublease them to another party.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–22)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, Browns Chicken has specific rights regarding the lease of the franchisee's store premises. If a franchisee leases their store premises, Browns Chicken requires prior consent to the lease terms. The lease agreement must include certain provisions to protect Browns Chicken's interests.
Specifically, Browns Chicken must receive notice of any default on the lease at least 10 days before any eviction action begins. This allows Browns Chicken the option to cure the default within 10 days of receiving the notice and to step in as the lessee, effectively substituting the franchisee. Additionally, if Browns Chicken terminates the Franchise Agreement according to its terms, or if the franchisee terminates the agreement without cause as outlined in the agreement, Browns Chicken has the option to have the lease assigned to them. To formalize this arrangement, the franchisee and the lessor must sign a Collateral Assignment of Lease, which is attached to the Franchise Agreement as Rider B. The franchisee is then required to provide Browns Chicken with a copy of the signed lease within 10 days.
If the franchisee owns the real estate where the Browns Chicken store is located, Browns Chicken has the right to require the franchisee to enter into a lease with them. Browns Chicken would then sublease the premises back to the franchisee under the same terms and conditions as the original lease. As long as the franchisee complies with the Franchise Agreement, Browns Chicken will continue the sublease. However, if the franchisee defaults on the Franchise Agreement, Browns Chicken can terminate the sublease and take possession of the premises or sublease it to another party. This arrangement ensures Browns Chicken's control over the location and operation of the franchise, even in situations where the franchisee owns the property.