Do Crepe De Licious' lease agreements contain any material restrictive covenants?

According to Crepe De Licious' 2025 Franchise Disclosure Document, the company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. This indicates that franchisees may not be subject to restrictions that could significantly limit their business operations within the leased premises, such as limitations on the types of products they can sell or restrictions on operating hours, according to the lease agreement.

However, the document also mentions that the Company leases retail space and two vehicles under operating lease arrangements through 2028, 2026 and 2025, respectively. In addition to a fixed base rental amount, most of the leases require additional variable payments for non-lease components and non-components such as real estate taxes, utilities, property insurance and excess mileage fees. The retail space lease agreement includes variable lease payments calculated using eight percent of retail sales over the minimum gross sales of $824,000. This variable lease payment is payable in monthly increments after the minimum gross sales amount is reached.

While the absence of material restrictive covenants offers flexibility, prospective franchisees should carefully review the lease terms for variable payment obligations. Understanding these variable costs, which include items like real estate taxes and insurance, is crucial for accurate financial forecasting. Additionally, the variable lease payment based on a percentage of sales exceeding $824,000 could impact profitability depending on the location and sales volume of the franchise. Franchisees should factor these variable costs into their business plan and financial projections to ensure they can meet their lease obligations and maintain a profitable operation.