What happens if the lease for the Auntie Annes location expires or is terminated?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
- O. Section 17.2 (Our Termination; No Opportunity to Cure) of the Agreement is amended by adding the following Section 17.2.M. and 17.2.N.:
- 17.2.M. If you operate a Concession Shop located in a Host Facility and you fail to comply with any of the terms of the Site Agreement or Site Agreement is terminated or (if it is your only Accepted Location) expires.
Lessor has agreed to lease to Lessee the SRU under the following terms and conditions:
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- Term. This Agreement shall be effective and binding from the date of execution and shall terminate upon the earlier of (i) the expiration or termination of the Lease Agreement; (ii) the expiration or termination of the Franchise Agreement and/or SRU Addendum; or (iii) the termination of this Agreement pursuant to Section 14 below.
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- Lessee Obligations. Lessee must provide Lessor with the following items:
- a. Lease Agreement. A copy of the signed Lease Agreement or a letter of approval from the Landlord for the operation of the SRU for a minimum term of two (2) months shall be delivered the Lessor upon execution of this Agreement. Lessor does not guarantee that an SRU will be available for the same term as the Lease Agreement. Lessee understands that due to the limited number of SRUs, Lessor cannot guarantee that the SRU will be delivered upon the commencement date of the Lease Agreement. Lessor reserves the right to terminate this Agreement and recover the SRU regardless of any remaining term(s) of the Lease Agreement.
You must use commercially reasonable efforts to ensure that all Leases include, unless we agree otherwise in writing:
- (ii) a provision that provides that upon the expiration or termination of this Agreement or upon your default under the Lease or under this Agreement, we will, without your or the landlord's further consent, have (a) a continuing right of entry into the Franchised Business, (b) the right to operate a Business at the Accepted Location, (c) the right, but not the obligation, to assume your interests under the existing terms, conditions and covenants of the Lease, and (d) should we assume your position under the Lease, the right to assign the Lease or sublet the premises to a third party which will operate a Business at the location;
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, the consequences of a lease expiring or being terminated depend on the specific circumstances, particularly if the location is a Concession Shop within a Host Facility or a Satellite Retail Unit (SRU).
For Concession Shops, Section 17.2.M of the Franchise Agreement states that Auntie Annes has the right to terminate the franchise agreement without an opportunity to cure if the franchisee fails to comply with the terms of the Site Agreement, or if the Site Agreement is terminated, or if the location is the only accepted location and the Site Agreement expires. This means that if the lease or agreement allowing the Auntie Annes Concession Shop to operate within the Host Facility ends, Auntie Annes can immediately terminate the franchise agreement.
For Satellite Retail Units (SRU), the agreement leasing the SRU to the franchisee terminates upon the earlier of (i) the expiration or termination of the Lease Agreement; (ii) the expiration or termination of the Franchise Agreement and/or SRU Addendum; or (iii) the termination of this Agreement. Auntie Annes also reserves the right to terminate the SRU agreement and recover the SRU regardless of any remaining terms of the Lease Agreement. This gives Auntie Annes significant control over the SRU, even if the franchisee's lease with the landlord is still active.
Additionally, Auntie Annes requires franchisees to use commercially reasonable efforts to include certain provisions in their leases. These include requiring the landlord to provide Auntie Annes with copies of any default notices, granting Auntie Annes the right to cure defaults, allowing Auntie Annes to operate at the location upon termination or expiration of the franchise agreement or lease, and giving Auntie Annes the right to remove proprietary products and materials upon lease expiration or termination. These stipulations ensure that Auntie Annes has options to maintain a presence at the location even if the franchisee's lease ends or the franchise agreement is terminated.