What is the dependency between the lease agreement and the Antioch Pizza Shop franchise agreement?
Antioch_Pizza_Shop Franchise · 2025 FDDAnswer from 2025 FDD Document
This term of this Agreement shall commence on the date it is signed by Franchisor and shall continue for a period of ten (10) years, subject to earlier termination as provided herein. The term of the lease or other contracts (including options) Franchisee enters into for the location of the Restaurant shall be for such period of time. If Franchisee is acquiring an existing Antioch Pizza Shop™ restaurant, the term of this Agreement shall be the shorter of: (a) the remaining term of the transferor's franchise agreement; or (b) the remaining term of the existing lease (including options) for the Restaurant, whichever is shorter.
Source: Item 22 — Contracts (FDD pages 56–57)
What This Means (2025 FDD)
According to the 2025 FDD, the term of the lease agreement for the Antioch Pizza Shop location is linked to the franchise agreement's term. Specifically, if a franchisee is acquiring an existing Antioch Pizza Shop restaurant, the franchise agreement's term will be the shorter of either the remaining term of the transferor's franchise agreement or the remaining term of the existing lease, including any options to renew. This means the lease's duration can directly limit how long the franchise agreement remains in effect for an existing location.
This dependency is significant for franchisees considering purchasing an existing Antioch Pizza Shop, as the length of the current lease could restrict the term of their franchise. If the lease has a short remaining term, the franchisee might need to negotiate a lease extension with the landlord to ensure a longer franchise term. This introduces a potential risk, as the landlord may not be willing to extend the lease or may demand unfavorable terms.
For new Antioch Pizza Shop locations, the FDD stipulates that the franchisee must execute a lease in a form approved by the franchisor. While it doesn't explicitly state that the franchise agreement is dependent on the lease for new locations, securing an approved lease is a prerequisite for developing the restaurant. The franchisee needs to provide a letter of intent or other satisfactory evidence confirming favorable prospects for obtaining the proposed site before executing the franchise agreement. This implies that the ability to secure a suitable lease is crucial for moving forward with the franchise.
In summary, while the franchise agreement's term can be directly limited by the lease term for existing Antioch Pizza Shop locations, securing an approved lease is a necessary step for new locations before the franchise agreement can be executed. Prospective franchisees should carefully evaluate the lease terms, especially when considering an existing restaurant, and ensure alignment with their long-term business plans.