Is a lease or sublease for the Annex Brands Center subject to a Collateral Assignment of Lease?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
B. LEASE OR SUBLEASE OF PREMISES FOR THE CENTER. Franchisor has the right to approve the terms of the lease or sublease of the Center. Franchisee agrees to deliver a copy of the proposed lease or sublease to Franchisor for its approval at least 10 days prior to its execution by Franchisee, and to deliver a final, executed copy to Franchisor within 5 days after execution. Franchisee agrees that it will not execute a lease or sublease for the Center that has, for any reason, been disapproved by Franchisor. Franchisee acknowledges and agrees that Franchisor's approval of the terms of any lease or sublease will not constitute a warranty or representation of any kind, expressed or implied, relating to the economic terms of such lease or
sublease. A lease or sublease for the Center will be subject to a Collateral Assignment of Lease (Attachment 5), will contain such terms as are reasonably acceptable to Franchisor, and, at Franchisor's option, will contain substantially the following provisions:
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- "Anything contained in this Lease to the contrary notwithstanding, Lessor agrees that, without its consent, this Lease and the right, title and interest of the Lessee hereunder may be assigned by the Lessee to Franchisor, or its successor or designee."
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- "Lessee hereby agrees that Lessor may, upon the written request of Franchisor, or its successor, disclose to Franchisor or its successor, all reports, information or data in Lessor's possession respecting sales made in, upon or from the leased premises."
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- "Lessor will give written notice to Franchisor, or its successor, concurrently with the giving of such notice to Lessee, of any default by Lessee under the Lease, and Franchisor or its successor will have, after the expiration of the period during which the Lessee may cure such default, an additional 15 days to cure, in its sole discretion, any such default. Such notice will be sent to Annex Brands, Inc., Attention: Patrick F. Edd, CEO and President, 7580 Metropolitan Drive, Suite 200, San Diego, CA 92108, or such other address as Franchisor may periodically specify in writing to Lessor".
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- "Lessor hereby agrees that, after the expiration, termination or non-renewal of this Lease, or of the Franchise between Lessee and Franchisor or its successor, Franchisor, or its successor or designee, may enter upon the leased premises for the purpose of removing all signs and other material bearing the trademarks, service marks or other commercial symbols of Franchisor or its successor".
If Franchisor cures any default by Franchisee under the lease, the total amount of all costs and payments incurred by Franchisor in effecting such cure will be immediately due and owing by Franchisee to Franchisor.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, a lease or sublease for the Center will be subject to a Collateral Assignment of Lease. This agreement, outlined in Attachment 5, means that Annex Brands has certain rights related to the lease. The lease or sublease must contain terms reasonably acceptable to Annex Brands.
Specifically, the lease or sublease will, at Annex Brands' option, include provisions allowing the franchisee (Lessee) to assign the lease to Annex Brands without the landlord's (Lessor) consent. The landlord must also disclose sales information to Annex Brands upon request and provide Annex Brands with written notice of any default by the franchisee, giving Annex Brands an additional 15 days to cure the default after the franchisee's cure period expires. Furthermore, Annex Brands has the right to enter the premises to remove its trademarks and commercial symbols after the lease or franchise agreement terminates.
If Annex Brands cures any default by the franchisee under the lease, the franchisee must immediately reimburse Annex Brands for all costs and payments incurred. The franchisee is required to deliver a copy of the proposed lease or sublease to Annex Brands for approval at least 10 days before execution and a final, executed copy within 5 days after execution. The franchisee cannot execute a lease or sublease that Annex Brands has disapproved.
Attachment 5 of the FDD provides a sample Collateral Assignment of Lease form, which is subject to negotiation with the Lessor. This form includes provisions where the Lessor agrees to notify Annex Brands of any franchisee default, allow Annex Brands to cure the default within 30 days, and recognize Annex Brands as the tenant if they take possession of the premises. The Lessor also agrees that Annex Brands can further assign the lease or enter into a sublease with another party reasonably acceptable to the Lessor, releasing Annex Brands from further liability once the new party assumes the tenant's obligations and operates the premises as a Center.