Is a Big Apple Bagels franchisee allowed to execute a lease that has been disapproved by the franchisor?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
- iii. Franchisee agrees that he will not execute a lease which has for any reason been disapproved by Franchisor. Franchisee shall deliver a copy of the signed lease to Franchisor within fifteen (15) days of execution thereof.
- iv. Franchisee shall execute a Collateral Assignment of Lease, attached hereto as Rider B, by which Franchisee assigns to Franchisor all of his right, title and interest as tenant under the lease for the BAGELS Store premises. The assignment is for collateral purposes and may be exercised only upon a default by Franchisee under his lease or under this Agreement. Franchisor's approval of Franchisee's lease is conditioned on receipt of the signed Collateral Assignment.
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, a franchisee is explicitly prohibited from executing a lease that has been disapproved by the franchisor. The FDD states that the location of the store must be approved by Big Apple Bagels, and the franchisee must submit the lease for the premises to Big Apple Bagels for examination and approval before signing it.
This requirement ensures that Big Apple Bagels maintains control over the locations and lease terms of its franchise stores. This protects the brand's image and ensures that the lease terms are favorable and align with the franchisor's standards. The franchisor also requires specific provisions to be included in the lease, such as allowing assignment of the lease to BAB Systems, Inc. and granting access to sales data.
Furthermore, Big Apple Bagels requires the franchisee to execute a Collateral Assignment of Lease, which assigns the franchisee's rights as a tenant to the franchisor as collateral. This assignment can be exercised if the franchisee defaults under the lease or the Franchise Agreement. The franchisor's approval of the lease is contingent upon receiving this signed Collateral Assignment. The franchisee must also provide a copy of the signed lease to Big Apple Bagels within 15 days of its execution.
These stipulations are typical in franchising, as they allow the franchisor to protect their brand and maintain standards across all locations. A prospective Big Apple Bagels franchisee should carefully review these requirements and understand the implications of the lease approval process and the Collateral Assignment of Lease.