Is a Bang Cookies franchisee required to collaterally assign the lease to the franchisor?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
Lease We do not review the terms of the lease for your Shop Location but require that your landlord acknowledge our rights as set forth in the lease agreement rider attached as Exhibit 4 to the Franchise Agreement (the "Lease Agreement Rider") and that you collaterally assign the lease to us as set forth in the collateral assignment of lease attached as Exhibit 5 to the Franchise Agreement (the "Collateral Assignment of Lease").
We possess the right to disapprove of a proposed lease if the landlord refuses to sign the Lease Agreement Rider in substantially the form set forth in Exhibit 4 to the Franchise Agreement.
The Lease Agreement Rider grants certain rights to us, including our right to be notified in the event of a lease default and, potentially, for us to enter the premises of your Shop.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 24–28)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, franchisees are required to collaterally assign the lease to the franchisor. Bang Cookies does not review the terms of the lease for the shop location. However, Bang Cookies requires that the landlord acknowledge their rights as outlined in the Lease Agreement Rider, which is attached as Exhibit 4 to the Franchise Agreement. The franchisee must also collaterally assign the lease to Bang Cookies, as detailed in the Collateral Assignment of Lease, which is attached as Exhibit 5 to the Franchise Agreement.
This requirement means that as a Bang Cookies franchisee, you will need to ensure that your lease agreement includes a rider acknowledging Bang Cookies's rights. Additionally, you will need to formally assign the lease to Bang Cookies as collateral. This gives Bang Cookies certain rights related to the lease, such as the right to be notified in the event of a lease default and potentially to enter the premises of your shop.
This is a fairly common practice in franchising, as it provides the franchisor with some security and control over the location of the franchise. It is important for a prospective franchisee to carefully review Exhibits 4 and 5 of the Franchise Agreement to fully understand the rights and obligations associated with the Lease Agreement Rider and the Collateral Assignment of Lease. Franchisees should consult with a legal professional to fully understand the implications of these documents before signing the franchise agreement.
Bang Cookies also possesses the right to disapprove of a proposed lease if the landlord refuses to sign the Lease Agreement Rider in substantially the form set forth in Exhibit 4 to the Franchise Agreement.