What is the consequence if a Bang Cookies franchisee's leasehold interests are terminated?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, if a franchisee's lease is terminated, the franchisor, as the Assignee, has the authority to take possession of the leased premises. This includes the right to eject the franchisee (Assignor) from the property and terminate their rights to the lease. This action can occur under specific conditions, such as the franchisee defaulting on the lease terms and failing to correct the default, or defaulting on the Franchise Agreement and failing to correct it.
Additionally, termination can occur if the franchisee defaults on any agreement supporting or guaranteeing the Franchise Agreement, or if the Franchise Agreement expires or is terminated. The franchisee is prohibited from terminating, surrendering, or modifying the lease without the franchisor'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 the franchisor agrees otherwise in writing. If the franchisee fails to do so, the franchisor has the right to act on behalf of the franchisee to effectuate these extensions and renewals.
These stipulations ensure that Bang Cookies maintains control over the location of its franchises, protecting the brand's presence and operational consistency. For a prospective franchisee, this means understanding that failure to comply with lease terms or the Franchise Agreement can result in losing not only the franchise but also the physical location. It also highlights the importance of maintaining open communication with Bang Cookies regarding lease renewals and modifications to avoid potential conflicts and ensure compliance with the franchise agreement.