What is the Collateral Assignment of Lease for a Bang Cookies franchise, and where is it found in the agreement?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchise Agreement – Exhibit 5
Collateral Assignment of Lease
COLLATERAL ASSIGNMENT OF LEASE
(for the benefit of Bang Cookies Franchise LLC and its assigns)
Assignee has the right and possesses full power and authority to take possession of the Leased Premises, to eject and expel Assignor from possession and occupancy of the Leased Premises and to terminate Assignor's right, title and interest in and to the Lease in the event of: (a) a default by Assignor under the terms of the Lease and Assignor's failure to timely cure such default, assuming that such default is capable of curing; (b) a default by Assignor (in Assignor's capacity as a Bang Cookies Shop franchisee) under the terms and conditions of the Bang Cookies Shop Franchise Agreement between Assignor, as franchisee, and Assignee, as franchisor (the "Franchise Agreement"), and Assignor's failure to timely cure such default, assuming that such default is capable of curing; (c) upon default of any agreement supporting or guaranteeing the Franchise Agreement; or (d) the expiration or termination of the Franchise Agreement.
Assignor agrees that Assignor will not and shall not permit, grant or suffer any termination, surrender or modification of the Lease without the prior written consent of Assignee. Throughout the term of the
Franchise Agreement, Assignor shall elect and exercise all options to extend the terms of the or renewal of the Lease not less than 120 days prior to the last day that the option must be exercised unless Assignee otherwise agrees in writing. Should Assignor fail to comply with the foregoing, Assignor does hereby appoint Assignee (subject to Assignees acceptance and invocation of such right) to act on behalf of Assignor for the purpose of effectuating extensions and renewals of the Lease.
Franchisor will have the option, but not the obligation, to assume or renew the Lease and the occupancy of the Leased Premises, including the right to sublease to another Franchisee of the Bang Cookies Franchise System, for all or any part of the remaining term of the Lease and, in connection with said assumption, Franchisor will not be obligated to pay to Landlord more than two months past due rent, real estate taxes and common area maintenance charges.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, the Collateral Assignment of Lease is detailed in Exhibit 5 of the Franchise Agreement. This agreement is for the benefit of Bang Cookies Franchise LLC and its assigns.
The Collateral Assignment of Lease grants Bang Cookies certain rights regarding the franchisee's lease of the premises. Specifically, Bang Cookies, as the assignee, has the power to take possession of the leased premises and terminate the franchisee's rights to the lease under certain conditions. These conditions include the franchisee's failure to cure a default under the terms of the lease, a default under the Bang Cookies Shop Franchise Agreement, default of any agreement supporting or guaranteeing the Franchise Agreement, or the expiration or termination of the Franchise Agreement.
The franchisee, as the assignor, cannot terminate, surrender, or modify the lease without Bang Cookies's written consent. The franchisee must also elect and exercise all options to extend or renew the lease at least 120 days before the option's deadline, unless Bang Cookies agrees otherwise in writing. If the franchisee fails to do so, Bang Cookies has the option to act on behalf of the franchisee to effectuate extensions and renewals of the lease. Bang Cookies also has the option to assume or renew the lease and sublease the premises to another franchisee, and in connection with said assumption, Bang Cookies will not be obligated to pay to Landlord more than two months past due rent, real estate taxes and common area maintenance charges.
This arrangement protects Bang Cookies's interests by ensuring they can maintain control of the location if a franchisee fails to meet their obligations. It also allows Bang Cookies to continue operating a franchise at that location, either directly or through another franchisee, minimizing disruption to the Bang Cookies brand and customer base. Prospective franchisees should carefully review Exhibit 5 to fully understand their obligations and the circumstances under which Bang Cookies can take control of the lease.