Under what circumstances will Annex Brands assume the obligations of the Assignor under the lease?
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.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, Annex Brands, Inc. will only assume the obligations of the assignor (franchisee) under the lease if Annex Brands takes possession of the premises. This is part of a Collateral Assignment of Lease agreement. This assignment serves as collateral, meaning it's security for Annex Brands, but doesn't automatically transfer lease obligations.
Specifically, Annex Brands has no liability or obligation related to the lease unless they take possession of the property. This might occur if the franchisee defaults on the lease, defaults on the Franchise Agreement, defaults on any instrument securing the Franchise Agreement, or upon the expiration, termination, or non-renewal of the franchise. In any of these cases, Annex Brands has the right to take possession of the premises.
If Annex Brands does take possession, 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 make the assignment happen. The agreement also states that all provisions of the Franchise Agreement remain enforceable, regardless of whether the Collateral Assignment of Lease is fully executed or enforced. This arrangement protects Annex Brands' interest in maintaining control over the location and ensuring continued operation, especially if a franchisee fails to meet their obligations.