Does the Collateral Assignment of Lease for Burros Fries require the Landlord's consent for the assignment?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
Provide us with a right to take assignment and possession of the Business, without the lessor's consent or any additional consideration. If we exercise this right and
Franchisee is in good standing, we'll sign a sublease with Franchisee for the same rent Franchisee is paying. In any case, we won't have any liability for any obligations incurred prior to our occupancy. Franchisee agrees to take whatever actions are necessary to accomplish such assignment and will, when you sign this Agreement, also sign the Collateral Assignment of Lease attached as Schedule 6. If Franchisee loses lease rights to the site in connection with any bankruptcy, the lessor will, on our request, enter into a new lease with us on essentially the same terms as the terminated lease;
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, the standard lease agreement that Burros Fries franchisees must enter into includes a provision that allows Burros Fries to take assignment and possession of the business without the lessor's consent or any additional consideration. This means that if Burros Fries exercises this right and the franchisee is in good standing, Burros Fries will sign a sublease with the franchisee for the same rent the franchisee is paying. However, Burros Fries will not be liable for any obligations incurred before their occupancy.
This clause is included to protect Burros Fries's interests in the event that a franchisee defaults on their obligations or the franchise agreement is terminated. It allows Burros Fries to quickly take over the location and continue operating the business without having to negotiate with the landlord or risk losing the location altogether.
For a prospective franchisee, this means that Burros Fries has a significant amount of control over the lease and the location of the business. While the franchisee is responsible for finding and securing a location, Burros Fries has the right to approve the lease and can take over the location if necessary. This could be seen as a benefit, as it provides some security and ensures that the location will remain a Burros Fries franchise. However, it also means that the franchisee has less control over their business and could lose their location if Burros Fries decides to exercise its right of assignment.