Can a Buona franchisee assign their lease to Buona, its parent, subsidiary, affiliate, or another franchisee without the lessor's consent, according to the Collateral Assignment?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Lessee shall have the right to assign all of its right, title and interest in the Lease to Franchisor or its parent, subsidiary, affiliate, or another franchisee, at any time during the term of the Lease, including any extensions or renewals thereof, without first obtaining Lessor's consent in accordance with the Collateral Assignment of Lease attached hereto as Attachment A (the "Collateral Assignment"). However, no assignment shall be effective until the time as Franchisor or its designated affiliate gives Lessor written notice of its acceptance of the assignment, and nothing contained herein or in any other document shall constitute Franchisor or its designated transferee a
party to the Lease, or guarantor thereof, and shall not create any liability or obligation of Franchisor or its designated transferee unless and until the Lease is assigned to, and accepted in writing by, Franchisor or its designated transferee. In the event of any assignment, Lessee shall remain liable under the terms of the Lease. Franchisor shall have the right to reassign the Lease to another franchisee without the Lessor's consent in accordance with this Section.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a franchisee can assign their lease to Buona, its parent company, a subsidiary, an affiliate, or another franchisee without needing the lessor's consent. This is made possible through the Collateral Assignment of Lease, which is included as Attachment A to the lease agreement. However, for the assignment to be valid, Buona or its designated affiliate must provide written notice to the lessor, accepting the assignment.
It's important to note that even with this assignment, the original franchisee remains liable under the terms of the lease. Furthermore, Buona retains the right to reassign the lease to another franchisee without requiring the lessor's consent. This provision offers Buona flexibility in managing its franchise locations and ensures business continuity if a franchisee exits the system.
This arrangement benefits Buona by streamlining the process of transferring leases, which can be particularly useful in cases of franchisee default or business restructuring. For a prospective franchisee, this clause could be seen as a double-edged sword. On one hand, it simplifies the process if they want to sell their franchise to another party within the Buona system. On the other hand, they remain liable under the lease even after assignment, which could pose a risk if the new tenant defaults.