Under the Anago Collateral Assignment of Lease Agreement, when is the Assignee not liable for rent or other obligations under the lease?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
e SRA, (c) termination of the SRA by Assignee for cause, or (d) an expression by Assignor of its desire to terminate the Lease, Assignee may, at its option, upon written notice to Landlord and Assignor, assume the Lease and occupy the Premises. Upon exercise of this option, Assignee shall be deemed to be substituted as the tenant under the Lease in the place and stead of Assignor and shall be deemed to have assumed expressly all of the terms, covenants and obligations of the Lease therefore applicable to Assignor which arise after Assignee's assumption of the Lease and shall likewise be entitled to enjoy all of the rights and privileges granted to Assignor under the terms and conditions of the Lease. Notwithstanding the foregoing, in the event Assignee exercises its rights under this paragraph 2, Assignor shall remain obligated under the Lease.
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- So long as Assignee shall not have exercised its option to take possession of the Premises under the foregoing provisions, Assignee shall not be liable for rent or any other obligation under the Lease, and Assignor shall remain liable for all such rent and obligations. Assignor shall be liable to Assignee for all payments by Assignee for rent and other Lease obligations. The parties acknowledge that such payments are reasonable expenses of foreclosure.
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- Upon the occurrence of one of the events set forth in paragraph 2 above, Assignee shall have the right to assign the Lease to an approved Anago Subfranchisor without obtaining Landlord's prior written consent, provided that such subfranchisor: (i) has a net worth equal to or greater than the net worth of Assignor at the time of Lease execution; and (ii) assumes all of the Assignor's obligations under the Lease.
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Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, the Assignee, typically Anago Franchising, Inc., is not liable for rent or any other obligations under the lease under specific conditions outlined in the Collateral Assignment of Lease Agreement. This lack of liability is contingent upon Anago not exercising its option to take possession of the premises. As long as Anago has not taken possession, the Assignor, which is the franchisee, remains responsible for all rent and other lease-related obligations. This arrangement protects Anago from being immediately responsible for lease payments should the franchisee default on their obligations.
This provision is designed to provide Anago with flexibility in managing the lease in case of franchisee default. By not immediately assuming the lease obligations, Anago can assess the situation and decide on the best course of action, such as finding a new franchisee to take over the lease or negotiating with the landlord. However, once Anago exercises its option to take possession of the premises, it assumes all the responsibilities and obligations of the lease, including rent and other associated costs.
The agreement also stipulates that the Assignor (franchisee) is liable to Anago for all payments made by Anago for rent and other lease obligations, acknowledging such payments as reasonable expenses of foreclosure. This clause ensures that if Anago does make any payments on behalf of the franchisee, the franchisee is ultimately responsible for reimbursing Anago. This arrangement protects Anago's financial interests while providing a mechanism to maintain the lease during a period of transition or default.
Furthermore, the landlord agrees that as long as Anago has not entered into possession of the premises, it will not be liable for any rent or other obligation of the Assignor under the lease, and the Assignor will be solely liable for all such rents and obligations. The landlord also acknowledges that the lease may not be amended or terminated without Anago's prior written consent, which will not be unreasonably withheld, and that the landlord will promptly notify Anago of any expression by the Assignor of its desire to terminate the lease. This multi-party agreement ensures that all parties are aligned and aware of their responsibilities and rights under the lease agreement.