Can a Big Apple Bagels franchisee 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.
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 the franchisor has disapproved. The FDD states that the franchisee must submit the lease for the store premises to Big Apple Bagels for examination and approval before signing it.
This requirement ensures that Big Apple Bagels maintains control over the location and terms of the lease, protecting its brand and the interests of other franchisees. The lease must also include specific provisions that allow BAB Systems, Inc. (the franchisor) to take over the lease under certain conditions, such as the franchisee's default or termination of the franchise agreement. Additionally, the lease must state that the premises will be used only for a Big Apple Bagels store.
Furthermore, Big Apple Bagels requires the franchisee to execute a Collateral Assignment of Lease, which assigns all the franchisee's rights and interests in the lease 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, reinforcing the franchisor's control over the store's location and lease terms. This is a fairly common practice in franchising, as it protects the franchise system's real estate interests.