What happens to the acceleration of indebtedness if Alloy exercises its option to be substituted as obligor?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Assumption and Subsequent Assignment By Franchisor.
If Franchisor elects to assume the Lease under paragraph 2, or unilaterally assumes the Lease as provided for in paragraphs 3 or 4, Landlord and Tenant agree that:
- (a) Tenant will remain liable for the responsibilities and obligations, including amounts owed to Landlord, prior to the date of assignment and assumption.
Further, Tenant shall be and remain liable to Landlord for all of its obligations under the Lease, notwithstanding any assignment or assumption of the Lease by Franchisor.
Franchisor shall be entitled to recover from Tenant all amounts it pays to Landlord to cure Tenant's defaults under the Lease, including interest and reasonable collection costs.
- (b) Franchisor, upon taking possession of the Premises, shall cure any default specified by Landlord within the timeframes noted herein and shall execute and deliver to Landlord its assumption of Tenant's rights and obligations under the Lease.
Franchisor shall pay, perform and be bound by all the duties and obligations of the Lease applicable to Tenant.
- (c) At or after the time Franchisor assumes Tenant's interests under the Lease, the Franchisor may, at any time, assign such interests or sublet the Premises to an ALLOY franchisee.
Any such assignment shall be subject to the prior written consent of the Landlord, which Landlord
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
Based on the 2025 Alloy Franchise Disclosure Document, if Alloy elects to assume the lease, the franchisee (Tenant) remains liable to the landlord for all obligations under the lease, even if Alloy assumes or assigns the lease. Alloy can recover from the franchisee any amounts paid to the landlord to correct the franchisee's defaults, including interest and collection costs.
Upon taking possession of the premises, Alloy must address any defaults specified by the landlord within the given timeframes and formally assume the franchisee's rights and obligations under the lease. Alloy is then obligated to fulfill all duties and responsibilities of the lease applicable to the franchisee.
Furthermore, Alloy has the option to assign these interests or sublet the premises to another Alloy franchisee at any time after assuming the lease. However, any such assignment requires the prior written consent of the landlord. This clause protects the landlord's interests by ensuring they have a say in who occupies their property, even after Alloy steps in.