What happens if the Franchisor elects to assume the Lease for the Bhc restaurant?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisor elects to assume the Lease under paragraph 2, or unilaterally assumes the Lease as provided for in paragraphs 3 or 4, Landlord and Tenant agree that:
- A.
Tenant will remain liable for the responsibilities and obligations, including amounts owed to Landlord, prior to the date of assignment and assumption.
Further, Tenant shall be and remain liable to Landlord for all of its obligations under the Lease, notwithstanding any assignment or assumption of the Lease by Franchisor.
Franchisor shall be entitled to recover from Tenant all amounts it pays to Landlord to cure Tenant's defaults under the Lease, including interest and reasonable collection costs.
- B.
Franchisor, upon taking possession of the Premises, shall cure any default specified by Landlord within the timeframes noted herein and shall execute and deliver to Landlord its assumption of Tenant's rights and obligations under the Lease.
Franchisor shall pay, perform, and be bound by all the duties and obligations of the Lease applicable to Tenant, except that the Franchisor may elect not to assume or be bound by the terms of any Amendment to the Lease executed by Tenant without obtaining Franchisor's prior written approval, which shall not be unreasonably withheld or delayed.
- C.
At or after the time Franchisor assumes Tenant's interests under the Lease, the Franchisor may, at any time, assign such interests or sublet the Premises to a BHC franchisee.
Any such assignment
shall be subject to the prior written consent of the Landlord, which Landlord shall not unreasonably withhold as it relates to a creditworthy franchisee who otherwise meets Franchisor's then-current standards and requirements for franchisees and agrees to operate the restaurant as a BHC Restaurant pursuant to a Franchise Agreement with Franchisor. Upon receipt by Landlord of an assumption agreement pursuant to which the assignee agrees to assume the Lease and to observe the terms, conditions, and agreements on the part of Tenant to be performed under the Lease, the Franchisor shall thereupon be released from all liability as tenant under the Lease from and after the date of assignment, without any need of a written acknowledgement of such release by 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 the lease, the original tenant (franchisee) remains liable for obligations prior to the assumption date, and continues to be liable for all obligations under the lease, even after Bhc assumes it. However, Bhc can recover from the tenant any amounts it pays to the landlord to correct the tenant's defaults, including interest and collection costs. Bhc is required to cure any defaults specified by the landlord within the given timeframes and must formally agree to take on the tenant's rights and responsibilities under the lease.
Bhc will be responsible for all duties and obligations of the lease applicable to the tenant. However, Bhc has the option not to be bound by any lease amendments the tenant made without Bhc's prior written approval, as long as such approval is not unreasonably withheld or delayed. This provision protects Bhc from unexpected or unfavorable lease modifications made by the franchisee without their consent.
Furthermore, once Bhc assumes the tenant's interests in the lease, Bhc has the right to assign these interests or sublet the premises to another Bhc franchisee. This assignment is contingent upon the landlord's prior written consent, which cannot be unreasonably withheld if the new franchisee is creditworthy, meets Bhc's standards, and agrees to operate the restaurant under a franchise agreement with Bhc. Upon the landlord's receipt of an assumption agreement from the new franchisee, Bhc is released from all liability as the tenant from the assignment date onward, without needing written acknowledgment from the landlord. This provides Bhc with flexibility in managing the leased property and ensuring continued operation as a Bhc restaurant.