If the Landlord has cause for nonpayment of funds, is Crave responsible for those funds?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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, Crave WM Franchising LLC (Sublessor) is not responsible for funds if the Landlord has cause for nonpayment. This situation arises if the Landlord terminates the agreement with the Landlord and Sublessor (Crave) with a prior ninety (90) days written notice.
In the event of such a termination during the initial sublease term, the Landlord is expected to reimburse Crave for the unamortized portion of the franchisee's (Sublessee) initial improvement costs, calculated using straight-line depreciation over the sublease term. Crave, in turn, is obligated to pay these funds received from the Landlord to the franchisee. However, if the Landlord has cause for nonpayment of these funds, Crave is not held responsible for ensuring those funds are paid to the franchisee.
The agreement stipulates that the Landlord may request proof of cause for nonpayment, which the franchisee must provide to Crave without issue. Failure to provide this documentation within fifteen (15) days of a written request could impact Crave's ability to receive funds from the Landlord, resulting in non-payment to the franchisee. This clause highlights the importance of the franchisee's cooperation in providing necessary documentation to facilitate the reimbursement process.
Furthermore, once the initial development costs are fully amortized over the initial sublease term, Crave will not be held responsible for any fees resulting from the Landlord exercising this termination provision. This clarifies that Crave's responsibility for these specific funds is limited to the period before the initial development costs are fully recovered through amortization.