What is the 'Franchise Agreement' referenced in the Conditional Assignment of Lease for a Beggars Pizza franchise?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon a default by Assignor under the Lease or under the Beggars Pizza Franchise, LLC Franchise Agreement for a Beggars Pizza® restaurant between Assignee and Assignor (the "Franchise Agreement"), or if a default by Assignor under any document or instrument securing the Franchise Agreement occurs, Assignee will have the right to take possession of the premises demised by the Lease, expel Assignor therefrom, and in such event, Assignor will have no further right, title, or interest in the Lease. Assignor will not suffer or permit any surrender, termination, amendment, or modification of the Lease without Assignee's prior written consent. Throughout the term of the Franchise Agreement and any renewals thereto, Assignor will elect and exercise all options to extend the term of or renew the Lease not less than thirty (30) days prior to the last day that the option must be exercised, unless Assignee otherwise agrees in writing. If Assignee does not otherwise agree in writing, and upon failure of Assignor to so elect to extend or renew the Lease as aforesaid, Assignor hereby appoints Assignee as Assignor's true and lawful attorney-infact to exercise such extension or renewal options in the name, place, and stead of Assignor for the purpose of effecting such extension or renewal.
Source: Item 23 — RECEIPT (FDD pages 39–192)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the 'Franchise Agreement' referenced in the Conditional Assignment of Lease is the agreement between Beggars Pizza Franchise, LLC and the franchisee (referred to as Assignor in this context). The Conditional Assignment of Lease is an agreement where the franchisee assigns their rights, title, and interest in a lease to Beggars Pizza Franchise, LLC as collateral.
This assignment serves as a security measure for Beggars Pizza. If the franchisee defaults on the lease or the Franchise Agreement, Beggars Pizza has the right to take possession of the property. The franchisee, as the assignor, retains the responsibility to maintain the lease by electing to extend or renew it, unless Beggars Pizza agrees otherwise in writing. If the franchisee fails to do so, Beggars Pizza is appointed as the attorney-in-fact to handle the extension or renewal.
The lessor (landlord) agrees to notify Beggars Pizza of any defaults by the franchisee under the lease and allows Beggars Pizza the right, but not the obligation, to cure these defaults. If Beggars Pizza takes possession of the premises and assumes the lease, the lessor will recognize Beggars Pizza as the tenant, provided any outstanding defaults are resolved. Beggars Pizza also has the right to further assign the lease to another party acceptable to the lessor, at which point Beggars Pizza will no longer have any liability under the lease.
For a prospective Beggars Pizza franchisee, this means that the lease for their restaurant location is conditionally assigned to Beggars Pizza as a form of security. Understanding the terms of both the Franchise Agreement and the lease is crucial, as defaults in either can lead to Beggars Pizza taking possession of the premises. Franchisees should pay close attention to the conditions under which Beggars Pizza can exercise its rights under the Conditional Assignment of Lease and ensure they understand their obligations regarding lease renewals and extensions.