What is the purpose of the Lease Agreement Rider in the Bang Cookies franchise agreement?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
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, the Lease Agreement Rider serves to protect the franchisor's interests in the event of a lease default by the franchisee. Bang Cookies does not review the lease terms for the shop location but requires the landlord to acknowledge Bang Cookies's rights as outlined in the Lease Agreement Rider, which is attached as Exhibit 4 to the Franchise Agreement. Additionally, the franchisee must collaterally assign the lease to Bang Cookies, as detailed in Exhibit 5, the Collateral Assignment of Lease.
The Lease Agreement Rider grants Bang Cookies specific rights, including the right to be notified if the franchisee defaults on the lease. It also potentially allows Bang Cookies to enter the premises of the shop. Bang Cookies retains the right to disapprove 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.
This requirement ensures that Bang Cookies has some control over the location of its franchises and can protect its brand and system standards even if a franchisee fails to meet their lease obligations. This is a fairly standard practice in franchising, as the location of a franchise is often critical to its success, and the franchisor wants to ensure continuity and minimize disruption to the brand. Prospective franchisees should carefully review Exhibit 4 to fully understand the rights that Bang Cookies is granted under the Lease Agreement Rider and discuss any concerns with a legal professional.