In the Burger King lease agreement, what entities are included in the definition of 'mortgagee'?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.14 DEFINITIONS. Section 17.14 of the Lease is hereby amended to add the following definitions:
- "(f) Leasehold Mortgagee. As used in this Addendum the term Leasehold Mortgagee shall mean the holder of any mortgage, deed of trust or other security interest in the building and other improvements located on the Premises together with the fixtures located therein, as more specifically defined in §17.14 (e) of the attached Lease (hereinafter the "Leasehold Improvements") for indebtedness of the Lessee and any assignee or transferee of such holder.
- (g) Leasehold Mortgage. As used in this Addendum the term Leasehold Mortgage shall mean any mortgage, deed of trust or other security interest encumbering or attaching to the Leasehold Improvements.
- (h) Mortgage. The definitions expressed in §17.14 (c) and §17.14 (d) referring to "mortgage" and "mortgagee" respectively shall refer to mortgages or mortgagees of the fee property and shall be distinguished from Leasehold Mortgage or Leasehold Mortgagee."
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 109–124)
What This Means (2025 FDD)
According to the 2025 Burger King Franchise Disclosure Document, the term 'mortgagee' refers to mortgagees of the fee property and is distinguished from 'Leasehold Mortgage' or 'Leasehold Mortgagee.' The 'Leasehold Mortgagee' is defined as the holder of any mortgage, deed of trust, or other security interest in the building and other improvements (Leasehold Improvements) on the premises for the indebtedness of the lessee and any assignee or transferee of such holder.
This distinction is important for Burger King franchisees because it clarifies the different types of mortgages that can be associated with the property. A regular 'mortgagee' holds a mortgage on the actual land and building, while a 'Leasehold Mortgagee' has a security interest specifically in the leasehold improvements, which are the buildings and fixtures built by the franchisee on the leased property.
Burger King franchisees should understand these definitions because they dictate the rights and obligations of each party in the event of a default or foreclosure. For example, if a franchisee takes out a loan to build a Burger King restaurant on leased land, the lender would be considered a 'Leasehold Mortgagee.' This distinction affects how the lender can recover their investment if the franchisee fails to meet their loan obligations.