What specific right does Chocolate Bash have regarding the assignment or subletting of the lease?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
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- 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, a franchisee has the right to assign or sublet their lease to Chocolate Bash. This is regardless of any provisions in the lease that might otherwise restrict such actions. However, the franchisee remains liable under the lease even after the assignment or sublease. If Chocolate Bash becomes the lessee, it can then assign or sublease the lease to another Chocolate Bash franchisee. Any lease provisions limiting the franchisee's ability to operate other Chocolate Bash outlets near the leased premises do not apply to Chocolate Bash itself.
This clause provides Chocolate Bash with significant flexibility and control over the location of its franchises. If a franchisee struggles or leaves the system, Chocolate Bash can step in, take over the lease, and either operate the location itself temporarily or transfer it to a new franchisee. This ensures business continuity and protects the brand's presence in that market.
For a prospective franchisee, this means that while they can assign the lease to Chocolate Bash, they are not released from their obligations under the lease. Therefore, franchisees should carefully consider the terms of their lease agreement and negotiate favorable terms, as they could remain responsible even after transferring the lease to Chocolate Bash. This arrangement is not uncommon in franchising, as it provides the franchisor with added security and control over key locations.