What consideration is mentioned in the Collateral Assignment of Lease agreement for Burros Fries?
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 Collateral Assignment of Lease agreement specifies that if Burros Fries exercises its right to take assignment and possession of the business and the franchisee is in good standing, Burros Fries will sign a sublease with the franchisee. The sublease will be for the same rent the franchisee is currently paying.
However, the document also states that Burros Fries will not have any liability for obligations incurred prior to their occupancy. The franchisee agrees to take necessary actions to accomplish the assignment and will sign the Collateral Assignment of Lease when signing the Franchise Agreement.
Additionally, if the franchisee loses lease rights due to bankruptcy, the lessor will, upon Burros Fries's request, enter into a new lease with them on essentially the same terms as the terminated lease. This ensures that Burros Fries has a mechanism to maintain control of the location, even in adverse situations such as franchisee bankruptcy.