If Chocolate Bash becomes the lessee, can it assign or sublease the lease to another Chocolate Bash franchisee?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
-
- Assignment and Subletting. Notwithstanding any provision of the Lease to the contrary, Tenant shall have the right to assign or sublet the Lease to Franchisor, provided that no such assignment or sublease shall relieve Tenant or any guarantor of liability under the Lease. If Franchisor becomes the lessee of the Lease Premises, then Franchisor shall have the right to assign or sublease its lease to a franchisee of the Chocolate Bash brand. Any provision of the Lease which limits Tenant's right to own or operate other Chocolate Bash outlets in proximity to the Leased Premises shall not apply to Franchisor.
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to the 2024 Chocolate Bash Franchise Disclosure Document, if Chocolate Bash becomes the lessee of a leased premises, it has the right to assign or sublease the lease to another Chocolate Bash franchisee. This clause is included to provide Chocolate Bash with flexibility in managing its real estate interests and ensuring continued operation of Chocolate Bash businesses.
This provision benefits Chocolate Bash by allowing them to maintain control over locations, even if the original franchisee's agreement is terminated. It also allows Chocolate Bash to ensure that a suitable operator continues to run the franchise at that location. For a franchisee, this could mean that if Chocolate Bash takes over a lease, they might have the opportunity to take over that location.
However, the original franchisee remains liable under the lease even if it is assigned or subleased to Chocolate Bash. This means that the franchisee's financial obligations to the landlord are not extinguished by the assignment or sublease. Franchisees should carefully consider this potential liability when entering into a lease agreement and understand the conditions under which Chocolate Bash might become the lessee.