Under what conditions can the franchisor succeed to the tenant's interest in the lease for a Cream franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
Landlord hereby consents, without payment of a fee and without the need for further Landlord consent, to (i) the collateral assignment of Tenant's interest in this Lease to Franchisor to secure Tenant's obligations to Franchisor under the Franchise Agreement; (ii) Franchisor's succeeding to Tenant's interest in the Lease as a result of Franchisor's exercise of rights or remedies under such collateral assignment or as a result of Franchisor's termination of, or exercise of rights or remedies granted in or under, any other agreement between Franchisor and Tenant; and/or (iii) Tenant's, Franchisor's, and/or any other franchisee of Franchisor's assignment of the Lease to another franchisee of Franchisor with whom Franchisor has executed its then-standard Franchise agreement.
Landlord agrees that to the extent Franchisor becomes Tenant, for howsoever brief a period, upon assumption of lease pursuant to this provision, that simultaneously with any subsequent assignment to another party, Franchisor will be released from all liability under the Lease or otherwise accruing after the date of such assignment; provided, that neither Tenant nor any other franchisee will be afforded such release in the event Tenant/such franchisee is the assignor, unless otherwise agreed by Landlord.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, Cream's franchisor can succeed to the tenant's (franchisee's) interest in the lease under specific conditions. The landlord consents to the collateral assignment of the tenant's lease interest to the franchisor. This secures the franchisee's obligations to Cream under the Franchise Agreement.
Cream can succeed to the lease if the franchisor exercises its rights or remedies under the collateral assignment. This can also occur if Cream terminates the Franchise Agreement or exercises rights/remedies granted within any agreement between Cream and the franchisee. Additionally, the lease can be assigned to another Cream franchisee with whom Cream has a standard franchise agreement.
If Cream becomes the tenant by assuming the lease, the landlord agrees that Cream will be released from liability under the lease once Cream assigns it to another party. However, this release from liability does not extend to the original franchisee or any other franchisee who is the assignor, unless the landlord agrees otherwise. This provision ensures Cream can transfer the lease without long-term obligations, while holding franchisees accountable.