What action must Deka Lash take to exercise its right to the lease assignment?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
NOW, THEREFORE, for and in consideration of the execution of the Lease by Landlord and Tenant and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:
- I. Tenant assigns all of its right, title and interest in and to the Lease and the Premises to Franchisor, effective automatically without further action of Tenant upon notice from Franchisor to Landlord. Although it is the intention of the parties that this Agreement may be effective as a present assignment, it is expressly understood and agreed that until an event described below has occurred and Franchisor has exercised its remedies, Landlord shall look to Tenant for full performance of Tenant's obligations under the Lease. In no event shall Franchisor have any liability, duty, or obligation to Landlord under the Lease or otherwise without Franchisor's written consent in its sole discretion.
- II. With the exception of Sections III, IV, VIII, IX below which are effective as of the date this Agreement is fully executed by the parties, the assignment of Lease contemplated hereunder is conditional and shall not be effective until the "Effective Date," as defined in Section 5 of this Agreement. Franchisor shall have no right to assume the Lease unless and until:
- a. Default by Tenant under the terms of the Lease, which default is not cured by Tenant within the time limits provided therein; or
- b. Default by Tenant under the terms of the Franchise Agreement which default is not cured by Tenant within the time limits provided therein; or
- c. Voluntary institution of any insolvency or bankruptcy proceedings as a debtor or insolvent on the part of Tenant or involuntary insolvency or bankruptcy proceedings brought against Tenant which are not dismissed within 60 days of the filing thereof;
- d. Discontinuation by the Tenant of operation of a Deka Lash operation in the Premises, whether voluntarily or involuntarily; or
- e. Nonrenewal by Tenant of the Franchise Agreement
- III. During the term of the Lease, Landlord agrees to give Franchisor written notice of all defaults of Tenant concurrently with the giving of such notice to Tenant. Landlord
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, Deka Lash can exercise its right to the lease assignment by providing notice to the landlord. The assignment of the lease becomes effective automatically without any further action required from the tenant (the franchisee) once Deka Lash notifies the landlord.
However, Deka Lash's right to assume the lease is conditional and depends on certain events. Deka Lash can only assume the lease if the franchisee defaults on the terms of the lease or the Franchise Agreement and fails to cure the default within the specified time limits. Additionally, Deka Lash can assume the lease if the franchisee voluntarily initiates insolvency or bankruptcy proceedings, or if involuntary proceedings are brought against them and not dismissed within 60 days. Discontinuation of the Deka Lash operation at the premises by the franchisee, whether voluntary or involuntary, or nonrenewal of the Franchise Agreement by the franchisee, also allows Deka Lash to assume the lease.
During the lease term, the landlord is obligated to provide Deka Lash with written notice of any defaults by the franchisee at the same time the notice is given to the franchisee. This ensures Deka Lash is informed of any issues and can take appropriate action if needed. This arrangement protects Deka Lash and ensures they can maintain control over the location of the franchise, which is critical for maintaining brand consistency and operational standards.