Who is responsible for the Lease obligations after the effective date of the assignment to the Franchisor for the Bhc restaurant?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
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 store as a Franchised 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, the original tenant (either the franchisee or master franchisee) remains liable for all lease obligations even after the lease is assigned to and assumed by Bhc. This means that if Bhc takes over the lease, the original tenant is still responsible for ensuring all terms of the lease are met. Bhc is entitled to recover from the tenant all amounts it pays to the landlord to correct the tenant's defaults under the lease, including interest and reasonable collection costs.
However, when Bhc takes possession of the premises, it must cure any defaults specified by the landlord within the given timeframes and formally assume the tenant's rights and obligations under the lease. Bhc is responsible for fulfilling all duties and obligations of the lease applicable to the tenant. There is an exception: Bhc can choose not to be bound by any amendments to the lease made by the tenant without Bhc's prior written approval, which Bhc will not unreasonably withhold or delay.
If Bhc later assigns the lease to a new Bhc franchisee, the original franchisee is still responsible for the lease obligations. However, once the landlord receives an assumption agreement from the new franchisee, agreeing to take on the lease terms, Bhc is released from all liability as the tenant from the assignment date forward. This release does not require written acknowledgement from the landlord.