What happens if Buona's Assignor fails to elect to extend or renew the lease?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
9. Termination or Expiration.
a) Upon Lessee's default and failure to cure the default within the applicable cure period, if any, under either the Lease or the Franchise Agreement, Franchisor will, at its option, have the right, but not the obligation, to take an automatic assignment of Lessee's interest and at any later time to re-assign the Lease to a new franchisee without Lessor's consent and to be fully released from any and all liability to Lessor upon the reassignment, provided the franchisee agrees to assume Lessee's obligations and the Lease.
b) Upon the expiration or termination of either the Lease or the Franchise Agreement, Lessor will cooperate with and assist Franchisor in securing possession of the Premises and if Franchisor does not elect to take an assignment of the Lessee's interest, Lessor will allow Franchisor to enter the Premises, without being guilty of trespass and without incurring any liability to Lessor, to remove all signs and all other items identifying the Premises as a Franchised Business and to make other modifications (such as repainting) as are reasonably necessary to protect the Franchisor's marks, system, and trade dress, and to distinguish the Premises from a Franchised Business. In the event Franchisor exercises its option to purchase assets of Lessee, Lessor shall permit Franchisor to remove all the assets being purchased by Franchisor.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, Section 9(a) of the lease agreement addresses the scenario where the lessee defaults and fails to cure the default within the given cure period under either the lease or the franchise agreement. In such a case, Buona, at its option, has the right, but not the obligation, to take an automatic assignment of the lessee's interest.
Buona can then re-assign the lease to a new franchisee without needing the lessor's consent. Upon this reassignment, Buona is fully released from any and all liability to the lessor, provided that the new franchisee agrees to assume the original lessee's obligations under the lease. This clause protects Buona by allowing them to maintain control over the location and ensure continued operation of a franchise at that site, even if the original franchisee fails to meet their obligations.
Section 9(b) outlines the procedure if either the lease or the franchise agreement expires or terminates. In this event, the lessor is required to cooperate with and assist Buona in securing possession of the premises. If Buona chooses not to take an assignment of the lessee's interest, the lessor must allow Buona to enter the premises without being considered a trespasser and without incurring any liability to the lessor. This entry allows Buona to remove all signs and other items that identify the premises as a franchised business and to make other necessary modifications, such as repainting, to protect Buona's marks, system, and trade dress, and to distinguish the premises from a franchised business. Additionally, if Buona exercises its option to purchase assets of the lessee, the lessor must permit Buona to remove all the assets being purchased.