What right does Cost Cutters Family Hair Salon reserve regarding the lease for a Cost Cutters Family Hair Salon location?
Cost_Cutters_Family_Hair_Salon Franchise · 2024 FDDAnswer from 2024 FDD Document
- **b.
Accept or reject your Store's lease or sublease**.
You must send us for review both the proposed terms of the lease or sublease (as they appear in, for example, a landlord letter of intent) and the actual lease or sublease, in each case after receipt from the landlord.
We will have 30 days after receiving the proposed lease terms, and another 30 days after receiving the actual lease (these timeframes will not overlap or run concurrently), to review and either accept or reject what you send us.
We also reserve the right to require your lease to contain certain terms and conditions that we specify, including step-in rights provided to us or our designee.
You may not sign any lease we have not accepted in writing.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 43–52)
What This Means (2024 FDD)
According to Cost Cutters Family Hair Salon's 2024 Franchise Disclosure Document, Cost Cutters Family Hair Salon has the right to accept or reject a franchisee's store lease or sublease. The franchisee must submit the proposed lease terms (e.g., a landlord's letter of intent) and the actual lease or sublease to Cost Cutters Family Hair Salon for review after receiving them from the landlord. Cost Cutters Family Hair Salon then has 30 days to review the proposed lease terms and another 30 days to review the actual lease, with these review periods running consecutively.
Cost Cutters Family Hair Salon also reserves the right to require specific terms and conditions in the lease, including step-in rights for themselves or their designee. A franchisee cannot sign any lease that Cost Cutters Family Hair Salon has not approved in writing. This provision ensures that Cost Cutters Family Hair Salon maintains control over the locations of its franchises and can protect its brand standards and interests.
This requirement is fairly common in franchising, as it allows the franchisor to ensure that the lease terms are favorable and do not expose the franchisee or franchisor to undue risk. Step-in rights, in particular, are a mechanism for the franchisor to take over the lease if the franchisee defaults or otherwise fails to operate the business according to the franchise agreement. Prospective franchisees should carefully review the lease terms and conditions with Cost Cutters Family Hair Salon to ensure they are acceptable before signing.