What happens to the Crave Sublessee's improvements if the Landlord exercises the buyout right?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
Shall this Sublease terminate because of landlord exercising the buyout right defined above, Sublessee shall immediately remove all property, signs and trade fixtures from the subleased premises and quit and surrender the Subleased premises in as-is condition, or a condition requested by the Sublessor.
- 2. Landlord Buyout Provision: As per agreement with the Landlord and the Sublessor, Landlord may, without cause, at any time, terminate the agreement with Landlord and Sublessor regarding the location in this Agreement with a prior ninety (90) days written notice. In the event such termination shall take place during the initial term of this sublease, Landlord shall reimburse sublessor for initial unamortized portion of the cost of sublessee's improvements to the subleased premises, calculated on a straight-line depreciation basis over said initial sublease term. Sublessor shall pay sublessee such funds, received from Landlord. Should Landlord determine cause for nonpayment of funds, Sublessor shall not be responsible for such funds. Landlord may require Sublessor to provide proof if such cause of this provision if exercised, which Sublessee shall provide to Sublessor without issue. Sublessee acknowledges that failure to do so may impact the ability for Sublessor to receive such funds from Landlord, which will cause non-payment to Sublessee. Such documentation shall be received within fifteen (15) days upon written request. It is expressly understood and agreed to by the parties that the amount specified by the parties is reasonable and Sublessor shall not be liable for any other cost or expense of sublessee seizing operations in the applicable Subleased premises. Upon full amortization of said
initial development costs over the initial Sublease term, the Sublessor, at no time for any reason be held responsible for fees as a result of exercising this provision.
Source: Item 22 — CONTRACTS (FDD pages 62–63)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, if the landlord exercises a buyout right, the sublessee must remove all property, signs, and trade fixtures from the subleased premises. The sublessee must then leave the premises in "as-is" condition, or in a condition requested by the sublessor (Crave WM Franchising LLC).
If the termination occurs during the initial term of the sublease, the landlord will reimburse the sublessor for the unamortized portion of the sublessee's initial improvements. This reimbursement is calculated using straight-line depreciation over the initial sublease term. The sublessor is then obligated to pay these funds to the sublessee, provided they are received from the landlord. However, if the landlord has cause for nonpayment, the sublessor is not responsible for providing these funds.
The sublessee must provide documentation to the sublessor within fifteen days of a written request to ensure the sublessor receives funds from the landlord. Failure to provide this documentation may prevent the sublessor from receiving funds from the landlord, resulting in non-payment to the sublessee. Once the initial development costs are fully amortized over the initial sublease term, the sublessor will not be held responsible for any fees resulting from the landlord exercising the buyout provision.
This arrangement means a Crave franchisee's investment in leasehold improvements is protected to some extent if the landlord terminates the lease early, but this protection is contingent on the landlord's reimbursement and the franchisee's timely provision of documentation. After the initial term, the franchisee bears the full risk of any unrecovered investment in improvements. Prospective franchisees should carefully consider the length of the initial term and the potential for landlord buyout when evaluating the financial viability of a Crave franchise location.