Under what condition will a Burger King lease terminate if the premises is taken or condemned?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
§11.2 SUBSTANTIAL TAKING. If at any time during the Lease Term, the whole or substantially all of the Premises is taken or condemned, this Lease shall terminate and expire on the date on which title vests in the condemning authority, upon which the Rent provided to be paid by Lessee shall be apportioned and paid to that date, and Lessee shall have no claim against Lessor for the unexpired Term of this Lease or for damage or for any other reason whatsoever. For the purposes of this Section, "substantially all of the Premises" shall be deemed to have been taken if, in the sole opinion of Lessor, the portion of the Premises not taken cannot be repaired or reconstructed in such a way that, by using only the amount of the net award available from the taking, there remains a complete, rentable structure capable of producing a proportionately fair and reasonable net annual income after payment of all operating expenses, Rent, Additional Rent and all other Additional Charges payable by Lessee, and after performance by the Lessee of all its obligations under this Lease.
§11.3 PARTIAL TAKING. In the event of a partial taking (any taking which is not "substantial"), this Lease shall not terminate, and Lessee shall promptly proceed to restore the remainder of the Building on the Land (if affected by the taking) to a complete, independent and self-contained architectural unit, usable for the purposes contemplated by this Lease, and Lessor shall pay to Lessee, subject to the same provisions and limitations specified herein with respect to insurance proceeds, the cost of restoration, which payment shall in no event exceed a sum equal to the amount of any separate award made for such restoration. Any deficiency will be paid by Lessee. Such restoration shall be subject to and shall be performed in accordance with the provisions of Section 5.3, except that any surety bond shall be in the amount, if any, by which the estimated cost of the work exceeds said separate award for the restoration. In the event that there is no separate award for restoration, the amount shall be fixed and settled by mutual agreement or by arbitration as provided in this Lease.
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 109–124)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, the lease will terminate if the whole or substantially all of the premises is taken or condemned. The termination occurs on the date that the title vests in the condemning authority. Upon termination, the rent will be apportioned and paid up to that date. The franchisee will not have any claim against Burger King for the unexpired term of the lease, damages, or any other reason.
Substantially all of the premises is considered to be taken if Burger King believes that the remaining portion cannot be repaired or reconstructed to create a complete, rentable structure. This structure must be capable of producing a proportionately fair and reasonable net annual income after covering all operating expenses, rent, additional rent, and other charges payable by the franchisee, while also allowing the franchisee to fulfill all obligations under the lease.
In the event of a partial taking, where the taking is not considered substantial, the lease will not terminate. The franchisee is then required to promptly restore the remainder of the building on the land to a complete, independent, and self-contained architectural unit suitable for the purposes outlined in the lease. Burger King will pay the franchisee the cost of restoration, but this payment will not exceed the amount of any separate award made for such restoration. Any deficiency will be paid by the franchisee. Such restoration shall be subject to and shall be performed in accordance with the provisions of Section 5.3, except that any surety bond shall be in the amount, if any, by which the estimated cost of the work exceeds said separate award for the restoration. In the event that there is no separate award for restoration, the amount shall be fixed and settled by mutual agreement or by arbitration as provided in this Lease.