Does Bananas Smoothies Frozen Yogurt assume liability for any indebtedness or obligations of the Developer?
Bananas_Smoothies_Frozen_Yogurt Franchise · 2025 FDDAnswer from 2025 FDD Document
- 4.3 In the event the Franchise Agreement between Everything Yogurt Brands, LLC and the Tenant shall expire or terminate, then the Tenant's rights pursuant to the Lease shall, at the option of Everything Yogurt Brands, LLC, be assigned and transferred to it provided that Everything Yogurt Brands, LLC or its Designated Person shall assume and be liable for all of Tenant's obligations, duties, and liabilities pursuant to the Lease.
- 4.4 Everything Yogurt Brands, LLC may exercise said option by sending the Landlord written notice of its intention to succeed to Tenant's rights under the Lease by certified mail, return receipt requested within thirty (30) days after the expiration or termination of the Franchise Agreement. Said notice shall, without any further action, operate as an Assignment of Tenant's rights under the Lease. Should the Lease be assigned or subleased to, and accepted in writing by Everything Yogurt Brands, LLC (or its Designated Person), then Everything Yogurt Brands, LLC will have the further right to assign or sublease the Lease and Premises to another franchisee of Everything Yogurt Brands, LLC at any time during the term of the Lease, including any extensions or renewals of the Lease, without first obtaining Landlord's consent. If Everything Yogurt Brands, LLC should assign its rights to another franchisee, then Everything Yogurt Brands, LLC will be relieved of all liability for any acts, conditions or circumstances arising after the date of that assignment.
- 4.5 Landlord expressly acknowledges that Everything Yogurt Brands, LLC is not a party to the Lease and will have no liability or responsibility under the lease, nor does Everything Yogurt Brands, LLC have any obligation or responsibility to assume the Lease or take an assignment of the Lease. Landlord further acknowledges that this Addendum to the Lease does not create any fiduciary relationship or other relationship of trust or confidence between the Tenant and Everything Yogurt Brands, LLC.
Source: Item 23 — RECEIPT (FDD pages 58–231)
What This Means (2025 FDD)
According to the 2025 Bananas Smoothies Frozen Yogurt FDD, the franchisor, Everything Yogurt Brands, LLC, generally does not assume liability for the debts and obligations of the developer (franchisee). However, there's a specific scenario where Everything Yogurt Brands, LLC has the option to assume the tenant's (franchisee's) rights and obligations under a lease agreement if the Franchise Agreement expires or terminates.
In the event that the Franchise Agreement between Everything Yogurt Brands, LLC and the tenant expires or terminates, Everything Yogurt Brands, LLC has the option to have the tenant's rights pursuant to the lease assigned and transferred to it. If Everything Yogurt Brands, LLC exercises this option, it must assume and be liable for all of the tenant's obligations, duties, and liabilities pursuant to the lease.
However, the FDD also states that Everything Yogurt Brands, LLC is not a party to the lease and will have no liability or responsibility under the lease, nor does Everything Yogurt Brands, LLC have any obligation or responsibility to assume the lease or take an assignment of the lease. This addendum to the lease does not create any fiduciary relationship or other relationship of trust or confidence between the tenant and Everything Yogurt Brands, LLC. This indicates that while there is a mechanism for the franchisor to assume the lease obligations, it is not automatic and is at the franchisor's discretion. Furthermore, the owners of the Developer may be required to provide personal guarantees of the Developer's obligations.