What is the minimum lease payment period for an SRU operated by an Auntie Annes franchisee?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
We, in our sole discretion and subject to availability, may grant to qualified franchisees the right to lease and operate an SRU as an additional selling location within the mall, airport, enclosed building or other retail location where an existing Shop is located. Such lease is controlled by the terms of the SRU Lease Agreement. Participating franchisees are responsible for lease payments for a period of at least 12 months. See Items 6 and 8.
Source: Item 10 — FINANCING (FDD page 61)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, franchisees participating in the Satellite Retail Unit (SRU) program are responsible for lease payments for a minimum of 12 months. This applies to franchisees who, with Auntie Anne's approval, lease and operate an SRU as an additional selling location within the same venue as their existing shop. The terms of the SRU Lease Agreement govern this lease.
This 12-month minimum payment period has implications if the franchisee chooses to terminate the SRU Addendum and SRU Lease Agreement before the end of that initial year. Specifically, if a franchisee terminates the SRU Addendum and SRU Lease Agreement within the first 12 months, they are still responsible for rental payments through the entire 12-month period, regardless of whether they continue to operate the SRU.
This policy ensures that Auntie Annes franchisees commit to a full year of lease payments for the SRU, providing a degree of financial stability for the franchisor related to these units. It also means that franchisees need to carefully consider the potential viability and profitability of the SRU before entering into the lease agreement, as early termination does not release them from their payment obligations for the full year.