What is the purpose of the assignment of lease to Annex Brands?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
FOR VALUE RECEIVED, the undersigned ("Assignor") hereby assigns, transfers and sets over unto ANNEX BRANDS, INC., a California corporation ("Assignee"), all of Assignor's right, title and interest as tenant in, to and under that certain lease, a copy of which is attached hereto as Exhibit A (the "Lease"), respecting premises commonly known as (the "Premises"). This Assignment is for collateral purposes only and, except as specified herein, Assignee will have no liability or obligation of any kind whatsoever arising from or in connection with this Assignment or the Lease unless Assignee will take possession of the Premises demised by the Lease pursuant to the terms hereof and will assume the obligations of Assignor thereunder. Assignor represents and warrants to Assignee that it has full power and authority to assign the Lease and its interest therein and that Assignor has not previously assigned or transferred, and is not otherwise obligated to assign or transfer, any of its interest in the Lease or the Premises demised thereby. On a default by Assignor under the Lease or under that certain Franchise Agreement with an effective date of("Franchise Agreement") between Assignor and Assignee for that certain Center located at the Premises, in the event of a default by Assignor under any document or instrument securing the Franchise Agreement, or on expiration, termination or non-renewal of the Franchise granted in the Franchise Agreement, Assignee will have the right and is hereby empowered to take possession of the Premises demised by the Lease, expel Assignor therefrom, and, in such event, Assignor will have no further right, title or interest in the Lease and will remain liable to Assignee for all past due rents Assignee will be required to pay to Lessor to effectuate the assignment contemplated hereunder. All provisions of the Franchise Agreement remain enforceable, including but not limited to Subsection 16.F, irrespective of whether this Collateral Assignment of Lease is fully executed, implemented or otherwise enforced. Assignor agrees that it will not suffer or permit any surrender, termination, amendment or modification of the Lease without Assignee's prior written consent. Throughout the term of the Franchise, Assignor agrees that it will elect and exercise all options to extend the term of or renew the Lease not less than 30 days before the last day that said option must be exercised, unless Assignee otherwise agrees in writing. On Assignee's failure otherwise to agree in writing, and on failure of Assignee to elect to extend or renew the Lease as aforesaid, Assignor hereby appoints Assignee as its true and lawful attorney-in-fact to exercise such extension or renewal options in the name, place and stead of Assignor for the sole purpose of effecting such extension or renewal.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, the assignment of lease is for collateral purposes, granting Annex Brands certain rights regarding the franchisee's lease agreement. Specifically, Annex Brands, as the assignee, receives the franchisee's rights and title as a tenant under the lease. This assignment serves as collateral, meaning it protects Annex Brands' interests in the event the franchisee defaults on their obligations.
In the event of a default by the franchisee under the lease, the Franchise Agreement, or any document securing the Franchise Agreement, Annex Brands has the right to take possession of the premises. This also applies if the franchise is terminated, expires, or is not renewed. Annex Brands can then expel the franchisee from the premises. The franchisee loses all rights to the lease but remains liable to Annex Brands for any past due rents that Annex Brands has to pay to the lessor to facilitate the assignment.
The franchisee cannot surrender, terminate, amend, or modify the lease without Annex Brands' written consent. The franchisee must also elect to extend or renew the lease at least 30 days before the option expires, unless Annex Brands agrees otherwise in writing. If the franchisee fails to do so, Annex Brands is appointed as the attorney-in-fact to exercise the extension or renewal options on behalf of the franchisee. This ensures that Annex Brands can maintain control over the location of the franchise, which is critical for business continuity and brand consistency.
Furthermore, the lease for the center will be subject to a Collateral Assignment of Lease, containing terms reasonably acceptable to Annex Brands. The lessor agrees that the lease can be assigned to Annex Brands without their consent. The lessor may disclose sales information to Annex Brands upon request and must provide Annex Brands with written notice of any franchisee default, giving Annex Brands an additional 15 days to cure the default after the franchisee's cure period expires. After the termination or non-renewal of the lease or franchise, Annex Brands can enter the premises to remove any signs or materials bearing Annex Brands' trademarks.