What is the consequence if an Apricot Lane franchisee is in default of the Premises lease?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event that (i) Tenant defaults in the performance of its obligations under that certain Franchise Agreement by and between Tenant and Franchisor such that the Franchise Agreement is terminated, or (ii) Tenant defaults under this Lease beyond any notice and cure period, Franchisor shall have the right, but not the obligation, to assume from Tenant all of the obligations of Tenant under the Lease without Landlord's or Tenant's approval, provided, however, that Franchisor delivers to Landlord written notice of its assumption of the Lease within 30 days of Franchisors written notice of Tenant default. Upon such assumption, Franchisor agrees to be bound by the terms, conditions and covenants of the Lease. Franchisor shall then have the right, with Landlord's consent which consent shall not be unreasonably withheld, conditioned or delayed, to assign this Lease to a bona-fide and qualified franchisee of Franchisor, provided that the following conditions are met:
- (i) Franchisor shall deliver to Landlord not less than 30 days' prior written notice of such assignment;
- (ii) at the time of any such assignment, Franchisor shall not be in default under this Lease;
- (iii) the franchisee meets all of the standard criteria applicable to Franchisor's franchisees generally;
- (iv) the franchisee shall be contractually obligated to operate the Premises under the same Trade Name and for the same Permitted Use specified in this Lease and in all other respects as required by this Lease;
- (v) the franchisee shall not be reasonably denied, and
- (vi) if the franchisee defaults under the provisions of its franchise agreement with Franchisor or under this Lease, Franchisor shall have the right, but not the obligation, to take possession of the Premises and cause the Premises to be continuously operated as required by this Lease notwithstanding such default until such time as the Premises are assigned to another franchisee, in which event all of the terms and provisions set forth herein shall be applicable to such assignment.
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, if a franchisee defaults under the lease beyond any notice and cure period, Apricot Lane has the right, but not the obligation, to assume all of the franchisee's obligations under the lease without the landlord's or the franchisee's approval. However, Apricot Lane must deliver written notice to the landlord of its assumption of the lease within 30 days of written notice of the franchisee's default. Upon such assumption, Apricot Lane agrees to be bound by the terms, conditions, and covenants of the lease.
Apricot Lane then has the right, with the landlord's consent, to assign the lease to another qualified franchisee, provided that the new franchisee meets certain conditions. These conditions include delivering a 30-day prior written notice to the landlord, not being in default under the lease at the time of assignment, meeting Apricot Lane's standard franchisee criteria, being contractually obligated to operate under the same trade name and permitted use, and not being reasonably denied by the landlord.
Furthermore, if the new franchisee defaults under their franchise agreement or the lease, Apricot Lane has the right, but not the obligation, to take possession of the premises and ensure its continuous operation as required by the lease until it is assigned to another franchisee. This ensures that the location continues to operate as an Apricot Lane store, maintaining brand presence and fulfilling lease obligations.