What is the purpose of the lease assignment related to the Closet Storage Concepts franchise?
Closet_Storage_Concepts Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee will occupy the Approved Location under a lease, Franchisee shall negotiate and execute a lease for the site with the landlord of the showroom site on terms satisfactory to Franchisor; provided, however, that, prior to execution of the lease, Franchisee shall submit a copy of the lease to Franchisor for its written approval.
- 1.3.1 Franchisor shall not approve any lease for the proposed location unless it contains certain provisions, including (i) a limitation that the premises shall be used only for a Closet & Storage Concepts business; (ii) a prohibition against assignment, subletting exercise or non-exercise of any option to extend, renew or purchase by Franchisee without Franchisor's prior written approval; (iii) permission for Franchisor to enter the premises and make changes to protect the Proprietary Marks; (iv) Franchisor will be given prior written notice of and have the option to cure any default of Franchisee under the lease; (v) the layout, sign usage and hours of operation of the Franchised Business as proposed in the Agreement and Operations Manual are permitted under the terms of the lease; and (vi) the lessor will agree not to lease premises in the immediate vicinity of the Approved Location to competing retail establishments that sell custom closet and garage storage services or related retail products and items without Franchisor's prior written consent.
The lease shall be for a term at least equal to the term of this Agreement or, in the alternative, for a shorter term provided the lease is renewable at the option of Franchisee for an additional term or terms which, together with the initial term, equal or exceed the term of this Agreement.
The lease must also contain general business terms acceptable to Franchisor.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2025 FDD)
According to Closet Storage Concepts' 2025 Franchise Disclosure Document, the franchise agreement requires that if a franchisee leases a location for their Closet Storage Concepts business, the lease must include a clause prohibiting assignment or subletting without the prior written approval of Closet Storage Concepts. This provision ensures that the franchisor maintains control over the location of its franchises and the parties occupying those locations.
Closet Storage Concepts also requires that the lease includes permission for the franchisor to enter the premises and make changes to protect its Proprietary Marks. Additionally, the franchisor wants to be given prior written notice of, and have the option to cure, any default of the franchisee under the lease. The lease term must be at least equal to the term of the Franchise Agreement, or renewable to meet that length, and contain general business terms acceptable to Closet Storage Concepts.
These stipulations allow Closet Storage Concepts to protect its brand and operational standards. By controlling lease assignments and subletting, Closet Storage Concepts can prevent unauthorized parties from operating a franchise location. The ability to enter the premises and make changes ensures brand consistency, while the option to cure defaults protects the location from closure due to franchisee issues. These lease requirements are typical in franchising, as they safeguard the franchisor's interests and maintain uniformity across the franchise system.