What is Bhc Franchisor's responsibility for lease obligations after assuming the lease from the tenant?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. So long as Tenant is in good standing under the Lease, Tenant has the right to assign all of its right, title and interest in the Lease to Franchisor or its affiliates during the term of the Lease, including any extensions or renewals, without first obtaining Landlord's consent. No assignment will be effective, however, until Franchisor or its designated affiliate gives Landlord written notice of its acceptance of the assignment. Franchisor will be responsible for the Lease obligations incurred after the effective date of the assignment. If Franchisor elects to assume the Lease, Franchisor shall not be required to begin paying rent until Landlord delivers possession of the Premises to the Franchisor. At any time until the Landlord delivers possession of the Premises, Franchisor shall have the right to rescind the election to assume by written notice to Landlord.
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- Default and Notices to Franchisor. Landlord shall send Franchisor copies of all notices of default under the Lease at the same time it provides Tenant with such notice. If Tenant fails to cure any defaults within the period specified in the Lease, Landlord shall promptly give Franchisor written notice thereof, specifying the defaults that Tenant has failed to cure. Franchisor has the right to unilaterally assume the Lease if Tenant fails to cure. Franchisor shall have 15 days from the date Franchisor receives such notice to exercise, by written notice to Landlord and Tenant, its right for Franchisor or its affiliate designee ("Franchisor Entity"), to assume the Lease. Franchisor shall have an additional 30 days from the expiration of Tenant's cure period in which to cure the default or violation. If Franchisor elects to assume the Lease, the Franchisor Entity shall not be required to cure defaults and/or to begin paying rent until Landlord delivers possession of the Premises to the Franchisor Entity. At any time until Landlord delivers possession of the Premises, Franchisor shall have the right to rescind the election to assume by written notice to Landlord.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, if Bhc elects to assume a lease, it will be responsible for the lease obligations incurred after the effective date of the assignment. However, Bhc is not required to begin paying rent until the landlord delivers possession of the premises to them. Bhc also retains the right to rescind its election to assume the lease by providing written notice to the landlord at any time until the landlord delivers possession of the premises.
Furthermore, the tenant (franchisee) remains liable for responsibilities and obligations, including amounts owed to the landlord, prior to the date of assignment and assumption. The tenant also remains liable for all of its obligations under the lease, even if Bhc assumes the lease. Bhc has the right to recover from the tenant all amounts it pays to the landlord to cure the tenant's defaults under the lease, including interest and reasonable collection costs.
Bhc, upon taking possession of the premises, is required to cure any default specified by the landlord within the timeframes outlined in the lease agreement and must formally assume the tenant's rights and obligations under the lease. Bhc is obligated to fulfill all duties and obligations of the lease applicable to the tenant. However, Bhc can choose not to be bound by any amendments to the lease executed by the tenant without Bhc's prior written approval, which cannot be unreasonably withheld or delayed.
After assuming the tenant's interests in the lease, Bhc has the option to assign such interests or sublet the premises to another Bhc franchisee at any time. This assignment is contingent upon obtaining prior written consent from the landlord, which cannot be unreasonably withheld if the assignee is a creditworthy franchisee who meets Bhc's standards and agrees to operate the store as a franchised Bhc restaurant under a Franchise Agreement with Bhc. Upon the landlord's receipt of an assumption agreement from the assignee, Bhc is released from all liability as the tenant under the lease from the assignment date, without needing written acknowledgment from the landlord.