Under what circumstances might Burros Fries and a franchisee execute an addendum to the franchise agreement?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall not execute a lease or sublease for the Business, or make any modifications or amendments to the lease or sublease, without our prior written consent, which we may grant, condition or withhold in our Business Judgment. Franchisee will deliver to us a copy of any lease or sublease for our review at least ten (10) days before execution. Franchisee must deliver a copy of the signed lease or sublease to us within five (5) business days after it is signed. We do not offer legal services to Franchisee and Franchisee is encouraged to consult with independent legal counsel for a legal review of the lease. Franchisee shall ensure that the lease or sublease for the Business contains, in an addendum or otherwise, the following provisions which:
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- Permit Franchisee to operate a Burros & Fries Business in accordance with this Agreement and the Manuals;
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- Provide that the site will be used only for the operation of a Burros & Fries Business, and prohibit Franchisee from assigning or modifying any of Franchisee's lease rights, or extending the term without our prior written consent;
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- Require the lessor to concurrently provide us with a copy of any written notices of default to Franchisee under the lease and give us the right to cure any default if weso choose; within fifteen (15) days following the expiration of the Franchisee's cure period under the lease;
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- 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
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, a franchisee might execute an addendum to their lease or sublease agreement under specific circumstances. The franchisee cannot execute a lease or sublease for the business, or make any modifications or amendments to it, without Burros Fries's prior written consent. This consent can be granted, conditioned, or withheld based on Burros Fries's business judgment. The franchisee must submit any lease or sublease for review at least ten days before signing and provide a copy of the signed document within five business days of execution.
The primary reason for an addendum is to ensure the lease contains provisions that protect Burros Fries's interests. These provisions include allowing the franchisee to operate a Burros & Fries Business according to the Franchise Agreement and Manuals, restricting the site's use solely to a Burros & Fries Business, and preventing the franchisee from assigning or modifying lease rights or extending the term without prior written consent. The addendum also requires the lessor to provide Burros Fries with copies of any default notices sent to the franchisee and grants Burros Fries the right to cure any default within fifteen days after the franchisee's cure period expires.
Furthermore, the addendum must give Burros Fries the right to take assignment and possession of the business without the lessor's consent or additional consideration. If Burros Fries exercises this right and the franchisee is in good standing, Burros Fries will sign a sublease with the franchisee at the same rent the franchisee was paying. The franchisee must also sign a Collateral Assignment of Lease when signing the Franchise Agreement. If the franchisee loses lease rights due to bankruptcy, the lessor must enter into a new lease with Burros Fries on similar terms if requested. These stipulations ensure that Burros Fries maintains control over the location and can continue operations even if the franchisee faces difficulties.