If assignment is prohibited, what must a Big Apple Bagels franchisee do with their leasehold interest?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
(3) assign to Franchisor or its designee Franchisee's leasehold interest in the premises of the BAGELS Store or, if an assignment is prohibited, sublease same to Franchisor or its nominee for the full remaining term and on the same terms and conditions as Franchisee's lease, including renewal and/or purchase options; and (4) assign to Franchisor or its designee any leases for any other tangible assets used in connection with the BAGELS Store.
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, if the assignment of a leasehold interest is prohibited, the franchisee must sublease the premises to Big Apple Bagels or its nominee. This sublease would be for the full remaining term of the original lease, and it must be on the same terms and conditions as the franchisee's original lease, including any renewal or purchase options. This requirement applies when Big Apple Bagels exercises its option to purchase the franchisee's assets upon expiration or termination of the franchise agreement.
This provision ensures that Big Apple Bagels can continue operating a location even if the franchisee's relationship ends and assignment of the lease is not possible. By subleasing, the brand maintains control over the location and can ensure continued operation under the Big Apple Bagels name. This is a fairly standard practice in franchising, as it protects the brand's presence and customer base.
For a prospective franchisee, this means understanding that upon the end of the franchise term or early termination, Big Apple Bagels has the right to take over the store's location. If the franchisee cannot assign the lease, they must sublease it under the same terms, which could include financial obligations and responsibilities as outlined in the original lease agreement. Franchisees should carefully review their lease and understand the conditions under which they might be required to sublease to avoid potential disputes or unexpected costs.