What right does Brueggers Bagels have regarding the leasehold interest upon termination or expiration of the franchisee's rights?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
If the Franchise Agreement is terminated or expires for any reason during the term of the Lease or any extension thereof, the Tenant, upon the written request of Franchisor, shall assign to Franchisor all of its right, title and interest in and to the Lease.
If Franchisor elects to accept the assignment of the Lease from the Tenant, it shall give the Tenant and the Landlord written notice of its election to acquire the leasehold interest.
The Landlord hereby consents to the assignment of the Lease from the Tenant to Franchisor, subject to the Tenant's and/or Franchisor's curing any defaults of the Tenant under the Lease before Franchisor takes possession of the Leased Premises.
Alternatively, in the event of a termination or expiration of the
Franchise Agreement, Franchisor may elect to enter into a new lease with the Landlord containing terms and conditions no less favorable than the Lease. Upon the Landlord's receipt of written notice from Franchisor advising the Landlord that Franchisor elects to enter into a new lease, the Landlord shall execute and deliver such new lease to Franchisor for its acceptance. Notwithstanding anything set forth in this Agreement to the contrary, in the event of (i) the assignment of the Lease by Tenant to Franchisor, or (ii) the election by Franchisor to enter into a new lease in the manner set forth herein above, or (iii) the subsequent assignment of the existing lease or new lease to any franchisor, franchisee or developer of a bakery café operating under the Tradename pursuant to Paragraph 4 herein, this Agreement shall survive and remain in effect. The Landlord and the Tenant shall deliver possession of the Leased Premises to Franchisor, free and clear of all rights of the Tenant or third parties, subject to Franchisor's curing any defaults of the Tenant, under the Lease, and executing an acceptance of the assignment of Lease or the new lease, as the case may be. In the event that Tenant has breached the Franchise Agreement, Franchisor is terminating Tenant's rights thereunder or the Franchise Agreement has expired, and in either case Franchisor desires to have the Tenant's leasehold interest under the Lease assigned to it, then Franchisor shall give notice thereof to Landlord and Tenant upon which Tenant's rights under the Lease shall be deemed, automatically without any further documentation, assigned to Franchisor effective the date of Franchisor's notice. Notwithstanding such assignment, Tenant shall remain liable for any obligations under the Lease. Upon receiving such notice from Franchisor, Landlord further consents, if such consent is necessary, to Franchisor's use of Tenant's personal property located in the Premises, however such consent does not grant Franchisor any right to do so.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, if the Franchise Agreement is terminated or expires, Brueggers Bagels has the right to request the franchisee to assign all rights and interest in the lease to them. Brueggers Bagels must provide written notice to both the franchisee and the landlord of their election to acquire the leasehold interest. The landlord consents to this assignment, provided that any defaults of the franchisee under the lease are resolved by the franchisee or Brueggers Bagels before Brueggers Bagels takes possession of the premises.
Alternatively, Brueggers Bagels can choose to enter into a new lease with the landlord under terms no less favorable than the original lease. Upon receiving notice from Brueggers Bagels, the landlord is required to execute and deliver the new lease to Brueggers Bagels for acceptance. In the event of the lease assignment to Brueggers Bagels, their franchisee, or a developer operating under the Brueggers Bagels tradename, the agreement remains in effect. The landlord and tenant must provide possession of the leased premises to Brueggers Bagels, free of any rights of the tenant or third parties, after Brueggers Bagels cures any defaults and accepts the lease assignment or new lease.
Furthermore, if the Franchise Agreement is breached or has expired and Brueggers Bagels wants the franchisee's leasehold interest, they can notify the landlord and tenant. Upon this notice, the tenant's rights under the lease are automatically assigned to Brueggers Bagels without further documentation, effective from the date of the notice. Despite this assignment, the tenant remains liable for any obligations under the lease. The landlord also consents to Brueggers Bagels's use of the tenant's personal property on the premises, although this consent does not grant Brueggers Bagels any specific right to do so.