If a franchisee defaults, does Apricot Lane have an obligation to take possession of the premises?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
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; and
- (v) the franchisee shall not be unreasonably denied.
Notwithstanding any assignment made pursuant to this Section, Tenant shall not be released from any liability for the payment of rent or other sums due under the Lease, or from the performance of any of the obligations and covenants of the Lease.
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)
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, Apricot Lane does not have an obligation to take possession of the premises if a franchisee defaults. Specifically, if a franchisee defaults under the Franchise Agreement such that it is terminated, or if the franchisee defaults under the lease agreement, Apricot Lane has the right, but not the obligation, to assume the franchisee's obligations under the lease.
If Apricot Lane chooses to assume the lease, it must provide written notice to the landlord within 30 days of the franchisor's written notice of the franchisee's default. Upon assuming the lease, Apricot Lane agrees to be bound by its terms and conditions. Apricot Lane then has the right to assign the lease to another qualified franchisee, subject to the landlord's consent, which cannot be unreasonably withheld.
If a 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 the premises are assigned to another franchisee. This clause protects the landlord's interest in having a continuously operating business on the premises, while giving Apricot Lane flexibility in managing a defaulted location. This arrangement is fairly typical in franchising, as it allows the franchisor to maintain brand presence and operational control without being forced to take over every struggling location.