What happens if a Creative World School franchisee loses possession of the School?

Based on the 2025 Creative World School Franchise Disclosure Document, if a franchisee owns the real estate where their franchise is located and defaults or terminates the Franchise Agreement, they will not be required to sell the real estate. However, Creative World School may require the franchisee to lease the real estate for the remainder of the franchise term, excluding any additional renewals, at fair market value. This provides some security for the franchisee, as they retain ownership of the property. However, it also means they could be obligated to lease the property to Creative World School, or another party, even if they would prefer to use it for a different purpose.

This arrangement is somewhat favorable for the franchisee compared to scenarios where the franchisor could force a sale of the property upon termination. By retaining ownership, the franchisee can potentially benefit from any appreciation in the property's value over time. However, the obligation to lease the property at fair market value could also present challenges, especially if the franchisee believes they could generate higher returns through alternative uses of the property.

It's important for prospective Creative World School franchisees to carefully consider the implications of this clause, especially if they plan to purchase the real estate for their franchise location. They should consult with legal and financial advisors to fully understand their rights and obligations under the Franchise Agreement and to assess the potential risks and rewards of owning the real estate. Understanding local real estate market conditions and potential alternative uses for the property is also crucial in making an informed decision.