factual

What must a Chop5 Salad Kitchen franchisee do if leasing the premises for their Restaurant?

Chop5_Salad_Kitchen Franchise · 2024 FDD

Answer from 2024 FDD Document

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ATTACHMENT "C"

TO FRANCHISE AGREEMENT

LEASE ADDENDUM

[See Attached]

Lease Addendum

State Effective Date
California
Hawaii
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Maryland
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Background

  • A. On [___________], 202[__], Franchisor and Tenant executed a CHOP5 Salad Kitchen Franchise Agreement (the "Franchise Agreement"), pursuant to which Franchisor granted Tenant the right and obligation to develop, open and operate a CHOP5 Salad Kitchen restaurant at the premises described in Exhibit "A" (the "Premises").
  • B. Concurrently with the execution of this Agreement, Landlord and Tenant are executing a lease agreement (the "Lease"), pursuant to which Landlord will lease the Premises to Tenant.
  • C. To protect Franchisor's rights and interests under the Franchise Agreement, Landlord agrees to grant certain rights to Franchisor as set forth below.

Agreement

  1. Default Notices. Landlord agrees to provide Franchisor with copies of all written default notices sent to Tenant at the same time such notices are sent to Tenant. Landlord agrees to send such copies to Franchisor by email and registered mail as set forth below (Franchisor may change the notice email and address from time to time by sending written notice to Landlord):

Email: brianm@chop5.com

Mail: CHOP5 Franchise LLC

6011 Brownsboro Park Blvd., Suite F

Louisville, Kentucky 40207 Attention: Brian Mills, President

    1. Right to Cure. If Tenant defaults under the Lease, Franchisor has the right (but not the duty) to cure such default within 15 days following the expiration of any applicable cure period. In such event, Franchisor may immediately commence occupancy of the Premises as the tenant under the Lease without obtaining Landlord's or Tenant's consent. Franchisor may thereafter assign the Lease to another CHOP5 Salad Kitchen franchisee or to an entity owned and/or controlled by Franchisor. If it does, Franchisor must first obtain Landlord's written approval of the assignee. Landlord, however, must neither unreasonably withhold nor delay its approval thereof. Landlord will acknowledge any such assignment in writing. No assignment permitted under this Section is subject to any assignment or similar fee or will cause any rental acceleration.
    1. Right to Assign. At any time, including, without limitation, upon the expiration or termination of the Franchise Agreement, and without Landlord's prior consent, Tenant may assign the Lease to Franchisor. In such event, Franchisor may thereafter assign the Lease to another CHOP5 Salad Kitchen franchisee or to an entity owned and/or controlled by Franchisor. If it does, Franchisor must first obtain Landlord's written approval of the assignee. Landlord, however, must neither unreasonably withhold nor delay its approval thereof. Landlord will acknowledge any such assignment in writing. No assignment permitted under this Section is subject to any assignment or similar fee or will cause any rental acceleration.
    1. Right of First Refusal. Landlord hereby grants Franchisor the first right of refusal to lease the Premises as the new tenant upon the expiration or termination of the Lease.

Source: Item 23 — RECEIPT (FDD pages 50–178)

What This Means (2024 FDD)

According to the 2024 Chop5 Salad Kitchen Franchise Disclosure Document, if a franchisee leases the premises for their restaurant, several conditions apply to protect the franchisor's interests. The landlord must agree to provide Chop5 Franchise LLC with copies of all written default notices sent to the franchisee (tenant) at the same time they are sent to the franchisee. These notices must be sent by both email to brianm@chop5.com and by registered mail to Chop5 Franchise LLC at 6011 Brownsboro Park Blvd., Suite F, Louisville, Kentucky 40207, Attention: Brian Mills, President. The franchisor can change this contact information by providing written notice to the landlord.

Chop5 Franchise LLC also retains certain rights regarding the lease. They have the right, but not the duty, to cure any default under the lease within 15 days after the franchisee's cure period expires. If they choose to do so, they can immediately take occupancy of the premises without needing consent from the landlord or franchisee. Following this, Chop5 Franchise LLC can assign the lease to another Chop5 Salad Kitchen franchisee or an entity they own or control, though they must first obtain the landlord's written approval, which the landlord cannot unreasonably withhold or delay. The landlord must acknowledge any such assignment in writing, and no assignment fees or rental acceleration can be applied.

Additionally, the franchisee (tenant) can assign the lease to Chop5 Franchise LLC at any time, including upon the expiration or termination of the Franchise Agreement, without the landlord's prior consent. In this case, Chop5 Franchise LLC can then assign the lease to another franchisee or an entity they control, subject to the same conditions as above regarding landlord approval. Chop5 Franchise LLC also has the first right of refusal to lease the premises upon the expiration or termination of the lease, with 30 days to decide whether to exercise this right. The landlord also agrees that the expiration or termination of the Franchise Agreement constitutes a default under the lease, giving Chop5 Franchise LLC certain rights.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.