What happens if a C3 Wellness Spa franchisee's leasehold interests are terminated?
C3_Wellness_Spa Franchise · 2024 FDDAnswer from 2024 FDD Document
- (i) Franchisee is dissolved, and/or Franchisee's leasehold interests and/or rights in or to Franchisee's Spa Location are terminated;
Assignee has the right and possesses full power and authority to take possession of the Leased Premises, to eject and expel Assignor from possession and occupancy of the Leased Premises and to terminate Assignor's right, title and interest in and to the Lease in the event of: (a) a default by Assignor under the terms of the Lease and Assignor's failure to timely cure such default, assuming that such default is capable of curing; (b) a default by Assignor (in Assignor's capacity as an C3 Wellness franchisee) under the terms and conditions of the C3 Wellness Franchise Agreement between Assignor, as franchisee, and Assignee, as franchisor (the "Franchise Agreement"), and Assignor's failure to timely cure such default, assuming that such default is capable of curing; (c) upon default of any agreement supporting or guaranteeing the Franchise Agreement; or (d) the expiration or termination of the Franchise Agreement.
Franchisor will have the option, but not the obligation, to assume or renew the Lease and the occupancy of the Leased Premises, including the right to sublease to another Franchisee of the C3 Wellness Franchise System, for all or any part of the remaining term of the Lease and, in connection with said assumption, Franchisor will not be obligated to pay to Landlord more than two months past due rent, real estate taxes and common area maintenance charges.
Throughout the term of the
Franchise Agreement, Assignor shall elect and exercise all options to extend the terms of or renew the Lease not less than 120 days prior to the last day that the option must be exercised unless Assignee otherwise agrees in writing. Should Assignor fail to comply with the foregoing, Assignor does hereby appoint Assignee (subject to Assignees acceptance and invocation of such right) to act on behalf of Assignor for the purpose of effectuating extensions and renewals of the Lease.
Source: Item 23 — RECEIPTS (FDD pages 59–293)
What This Means (2024 FDD)
According to the 2024 C3 Wellness Spa Franchise Disclosure Document, if a franchisee's leasehold interests or rights to their spa location are terminated, it constitutes a default under the franchise agreement.
Specifically, the FDD states that the franchisor, as the 'Assignee,' has the right to take possession of the leased premises and terminate the franchisee's rights to the lease if the franchisee defaults on the lease terms, defaults on the C3 Wellness Spa Franchise Agreement, defaults on any agreement supporting or guaranteeing the Franchise Agreement, or upon the expiration or termination of the Franchise Agreement.
Additionally, the franchisor has the option, but not the obligation, to assume or renew the lease and occupancy of the leased premises, including the right to sublease to another C3 Wellness Spa franchisee. If the franchisor assumes the lease, they are only obligated to pay up to two months of past due rent, real estate taxes, and common area maintenance charges. The franchisee is also obligated to elect and exercise all options to extend or renew the lease no less than 120 days prior to the last day that the option must be exercised, unless the franchisor agrees otherwise in writing; failure to do so allows the franchisor to act on behalf of the franchisee to effectuate extensions and renewals of the lease.