Is the Option and Store Lease agreement for Big O Tires a required contract?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
| Exhibit | Contract |
|---|---|
| B-1 | BF Franchise Agreement and Schedules |
| B-2 | Successor Franchise Rider to Franchise Agreement |
| C | Standard Release Form |
| E | Franchise Deposit Receipt Agreement |
| F | Sublease |
| G | Promissory Notes |
| H | Security Agreement |
| I | Facility Participation Agreement |
| J-1 | Technology Agreement and Software License Agreement (Navex) |
| J-2 | Technology Agreement and End User Agreement (Tekmetric) |
| O | Closing Acknowledgment |
| P | Lease Agreement |
| Q | Market Reservation Agreement |
| R | Road Hazard Service Contract |
| U | Certification Program Agreement |
| V | State Disclosure Addenda and Agreement Riders |
| X | Agreement and Consent to Assignment of Big O Tires Store |
| Y | Option and Store Lease |
| Z | Deferred Maintenance Agreement |
Source: Item 22 — CONTRACTS (FDD page 102)
What This Means (2025 FDD)
According to the 2025 Big O Tires Franchise Disclosure Document, the Option and Store Lease is listed as an agreement under Exhibit Y.
This lease agreement outlines the terms and conditions under which a franchisee may lease the store premises. It includes details about the effective period of the lease, the franchisee's option to lease the premises, and conditions related to the sale of the store. The lease also specifies the permitted uses of the premises, such as the sale, installation, and servicing of tires and automotive-related products and services.
Several clauses in the Option and Store Lease protect the franchisee. For example, the franchisee (Lessee) has the right to deduct from rent payments if the Lessor defaults on monetary obligations to Big O Tires or its affiliates, up to certain limits. Additionally, Big O Tires, as Lessee, has a right of first refusal to purchase the premises if the Lessor decides to sell. These provisions provide some financial and operational security for the franchisee.
The document also addresses scenarios such as store sales and potential subordination of the lease to a mortgage. If the store is sold, the lease to the buyer must acknowledge the franchisee's rights under the Option and Store Lease and provide for automatic termination if the Franchise Agreement is terminated and the option is exercised. Furthermore, the franchisee may be required to subordinate their lease interest to a mortgage if the Mortgagee provides a Non-disturbance Agreement, ensuring the franchisee's continued occupancy.