What is the required action from the landlord to notify Craters & Freighters of a default under the lease?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
-
- Landlord agrees to notify Franchisor in writing ("Default Notice") upon the failure of Lessee to cure any default by Lessee under the Lease.
-
- Upon the delivery of the Default Notice in accordance with Section 1 above, Landlord agrees that Franchisor will have the right, but will not be obligated, to cure any default(s) by Lessee under the Lease within thirty (30) days after delivery by Landlord of the Default Notice ("Cure Period"). Franchisor will notify Landlord in writing whether it intends to cure the default(s) of Lessee and take an automatic assignment of Lessee's interest in the Lease.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, if a franchisee defaults on their lease, the landlord is required to provide written notice, called a "Default Notice", to Craters & Freighters. This requirement is part of an addendum to the lease agreement between the landlord and the franchisee.
Upon receiving the Default Notice, Craters & Freighters has the option, but not the obligation, to correct the franchisee's default within a 30-day period after the notice delivery. Craters & Freighters must inform the landlord in writing if they intend to address the default and assume the franchisee's lease.
This arrangement protects Craters & Freighters by giving them a chance to maintain the location and continue operations, which benefits the brand. For a potential franchisee, this clause offers some security, knowing that Craters & Freighters has a vested interest in ensuring the business location remains operational, even if the franchisee faces difficulties. The franchisee is responsible for ensuring that the lease for their franchised business includes these specific provisions.