What is the dependency for the landlord to recognize Craters & Freighters as the tenant under the lease?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Landlord consents to the foregoing collateral assignment of the Lease and agrees that, if Franchisor takes possession of the premises demised by the Lease and confirms to Landlord in writing that Franchisor will be assuming the obligations of Lessee under the Lease, Landlord will recognize Franchisor as the tenant under the Lease, provided that Franchisor has cured the default(s) of Lessee within the Cure Period.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, the landlord will recognize Craters & Freighters as the tenant under the lease if Craters & Freighters takes possession of the premises and confirms in writing to the landlord that Craters & Freighters will assume the obligations of the original lessee (the franchisee). This is conditional on Craters & Freighters having cured any defaults of the franchisee within the specified cure period.
This provision is part of an addendum to the lease agreement between the landlord and the franchisee, where Craters & Freighters is a third-party beneficiary. The addendum outlines the conditions under which Craters & Freighters can step in and take over the lease, which is triggered by the franchisee's failure to meet their lease obligations. The landlord is required to provide Craters & Freighters with a default notice, giving Craters & Freighters the option to cure the default and assume the lease.
For a prospective Craters & Freighters franchisee, this clause provides a safety net. If a franchisee defaults on their lease, Craters & Freighters has the option to take over the lease, ensuring the location remains operational under the brand. However, it's important to note that Craters & Freighters is not obligated to take over the lease; it is their right, not a requirement. The landlord's recognition of Craters & Freighters as the tenant is contingent on Craters & Freighters fulfilling the franchisee's obligations, specifically curing any defaults within the cure period.
This arrangement benefits both Craters & Freighters and the landlord by providing a mechanism to maintain the lease and the business operation at the location, even if the original franchisee fails. It also protects Craters & Freighters' brand and market presence. Franchisees should understand the circumstances under which Craters & Freighters might exercise this right and the implications for their own obligations under the franchise agreement and the lease.