Under what condition can a Burger King lessee provide a collateral assignment of the Lease Agreement?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to those parties named in §4.1 to be additional insureds under insurance provided by Lessee, the Leasehold Mortgagee shall be included as an additional insured as its respective interests may appear.
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, a Leasehold Mortgagee, which is essentially a lender who has a mortgage on the leasehold interest, can be included as an additional insured under the insurance policies provided by the lessee. This means that the Burger King franchisee (lessee) can provide a collateral assignment of the Lease Agreement to a Leasehold Mortgagee. This is accomplished by including the Leasehold Mortgagee as an additional insured on the franchisee's insurance policies.
If the Leasehold Mortgagee legally comes into possession of the premises, the use of the premises is subject to the Lessor's (Burger King Company LLC) written consent, which will not be unreasonably withheld. However, the premises cannot be used in violation of zoning or any restrictive covenants, nor for any illegal or immoral purpose. Burger King can reasonably withhold consent if the premises are to be used for a Burger King Restaurant or any fast-food restaurant operation other than Burger King.
Furthermore, if the Leasehold Mortgagee takes possession, the requirement for alterations to reflect the current Burger King image will not apply. All leasehold improvements remain the property of the lessee during the lease term but become the property of the Lessor upon the lease's expiration or termination. This addendum outlines the conditions under which a franchisee's lender can have rights and responsibilities related to the leased property, providing clarity for financing arrangements.