Under what conditions can Byrider Franchising Partners, LLC succeed to the Tenant's interest in the Lease?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding any provisions of this Lease to the contrary, Landlord hereby consents, without payment of a fee and without the need for further Landlord consent, to (i) the collateral assignment of Tenant's interest in this Lease to Franchisor to secure Tenant's obligations to Franchisor under the Franchise Agreement, and/or (ii) Franchisor's succeeding to Tenant's interest in the Lease as a result of Franchisor's exercise of rights remedies under such collateral assignment or as a result of Franchisor's termination of the Franchise Agreement due to Franchisee's breach or termination of the Franchise Agreement by Franchisee without cause, or Franchisor's exercise of rights or remedies granted in or under, any other agreement between Franchisor and Tenant, and/or (iii) Tenant's, Franchisor's and/or any other franchisee of Franchisor's assignment of the Lease to another franchisee of Franchisor with whom Franchisor has executed its then-standard franchise agreement.
Source: Item 22 — Contracts (FDD pages 87–88)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, Byrider Franchising Partners, LLC, as the Franchisor, can succeed to the Tenant's (Franchisee's) interest in the lease under specific conditions. The landlord consents to this succession without requiring a fee or further consent. This can occur (1) as a result of Byrider exercising its rights under a collateral assignment of the lease, which secures the franchisee's obligations to Byrider under the Franchise Agreement, (2) if Byrider terminates the Franchise Agreement due to the franchisee's breach, (3) if the franchisee terminates the Franchise Agreement without cause, or (4) if Byrider exercises its rights or remedies under any other agreement with the franchisee.
This provision is crucial for Byrider, as it allows them to maintain control over the location and continue operations, even if the original franchisee fails to meet their obligations or exits the system. It also allows Byrider to assign the lease to another franchisee, ensuring business continuity at that location. The landlord acknowledges that the tenant's operations are independently owned and operated and that the tenant is solely responsible for all obligations under the lease, unless Byrider or another franchisee expressly assumes these obligations in writing and takes possession of the premises.
This clause protects Byrider's interests by ensuring they have options to continue operating a franchise location if the original franchisee defaults or leaves. For a prospective franchisee, this means that Byrider has significant control over the lease and location, which could impact the franchisee's ability to operate independently. It is a fairly standard practice in franchising to have such clauses to protect the brand and ensure continuity of operations.
Prospective franchisees should carefully review the franchise agreement and lease to understand the full implications of these provisions. They should also consider the potential risks and benefits of entering into a franchise agreement where the franchisor has such extensive rights over the lease. Understanding these conditions is essential for making an informed decision about investing in a Byrider franchise.