Is Crisp & Green obligated by agreements made by the franchisee with third parties?
Crisp_Green Franchise · 2024 FDDAnswer from 2024 FDD Document
the Lease to Franchisor, or its affiliates, at any time during the term of the Lease, including any extensions or renewals, without first obtaining Landlord's consent to such assignment; provided, however, no assignment of the Lease will be effective until Franchisor or its designated affiliate gives Landlord written notice of its acceptance of such assignment. If Franchisor, or its affiliate, elects to accept assignment of the Lease under this paragraph or unilaterally accepts assignment of the Lease as provided for in this Addendum, then Landlord and Tenant agree that (i) Tenant will remain liable for the responsibilities and obligations under the Lease, including without limitation,
amounts owed to Landlord, prior to the date of such assignment, and (ii) Franchisor, or its affiliate, will have the right to thereafter assign the Lease or sublease the Premises to a franchisee of Franchisor without the prior consent or approval of Landlord;
Source: Item 23 — RECEIPTS (FDD pages 66–252)
What This Means (2024 FDD)
Based on the 2024 Crisp & Green Franchise Disclosure Document, Crisp & Green's obligations regarding agreements made by franchisees with third parties are limited. Specifically, if Crisp & Green or its affiliate elects to accept assignment of a lease, the franchisee remains liable for responsibilities and obligations under the lease, including amounts owed to the landlord, prior to the date of such assignment. Crisp & Green, or its affiliate, is only responsible for obligations under the lease arising or incurred during the time that they are the tenant under the lease.
This means that if a Crisp & Green franchisee enters into a lease agreement and subsequently the franchisor takes over the lease, the franchisee is still responsible for any liabilities incurred before the assignment. However, Crisp & Green will be responsible for the lease obligations incurred after the assignment takes place. This is a common practice in franchising, where the franchisor may step in to take over a lease to ensure the continuity of the business.
This arrangement protects the landlord by ensuring that someone is always responsible for the lease payments. It also provides a mechanism for Crisp & Green to maintain control over the location of its franchises. For a prospective franchisee, it's crucial to understand that even if the franchisor assumes the lease, the franchisee remains liable for any prior debts or obligations. Therefore, franchisees should carefully manage their lease obligations to avoid potential liabilities even in the event of an assignment to Crisp & Green.