When does the assignment of the lease from the Deka Lash tenant to the franchisor become effective?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
of Financial Institutions 201 West Washington Avenue, 3rd Floor
Madison, WI 53703
EXHIBIT F-1 FRANCHISOR ADDENDUM; CONDITIONAL ASSIGNMENT OF LEASE
THIS FRANCHISOR ADDENDUM AND CONDITIONAL ASSIGNMENT OF LEASE ("Agreement") is made a part of that certain Lease to which it is attached and is dated of even date therewith. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Lease.
WHEREAS, as a condition to the grant of rights under the Franchise Agreement to Tenant, Franchisor requires that Tenant and Landlord enter into this Agreement by their attachment to the Lease to which it is attached.
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
- further agrees to give Franchisor a 10 day period to cure such default, or the period provided to the Tenant in the Lease, whichever period shall be longer.
- IV. Nothing in this Agreement shall obligate Franchisor to cure any such default, unless Franchisor agrees in writing in its sole discretion.
- V. The date upon which the assignment shall be effective (the "Effective Date"), is the date upon which Landlord and Tenant receive written notice from Franchisor that:
- a. Franchisor will cure the default of Tenant in the Lease in which Landlord has given notice to Franchisor pursuant to the provisions of Section 3 above, and that Franchisor will assume the Lease; or
- b.
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to the 2024 Deka Lash Franchise Disclosure Document, the assignment of the lease from the franchisee (tenant) to Deka Lash (franchisor) becomes effective automatically upon notice from Deka Lash to the landlord. However, until certain events occur and Deka Lash exercises its remedies, the landlord will continue to look to the franchisee for full performance of the tenant's obligations under the lease. Deka Lash will not have any liability, duty, or obligation to the landlord without Deka Lash's written consent.
The assignment of the lease is conditional and will not be effective until the "Effective Date," which is defined in Section 5 of the agreement. Deka Lash has no right to assume the lease unless and until certain conditions are met. These conditions include: default by the franchisee under the terms of the lease or the Franchise Agreement that is not cured within the specified time limits, voluntary institution of insolvency or bankruptcy proceedings by the franchisee, involuntary insolvency or bankruptcy proceedings brought against the franchisee that are not dismissed within 60 days, discontinuation of the Deka Lash operation at the premises by the franchisee, or nonrenewal of the Franchise Agreement by the franchisee.
The "Effective Date," is the date the landlord and franchisee receive written notice from Deka Lash that either Deka Lash will cure the franchisee's default and assume the lease, or that one of the aforementioned events (default, insolvency, discontinuation, or nonrenewal) has occurred and Deka Lash will assume the lease. From the Effective Date forward, Deka Lash assumes all rights, duties, responsibilities, and obligations of the franchisee arising under the lease. The landlord consents to the assignment of the lease to Deka Lash and agrees that Deka Lash may sublease or further assign the lease to another Deka Lash franchisee without the landlord's further consent. Upon such assignment, Deka Lash will have no further liability under the lease.
It is important for a prospective Deka Lash franchisee to understand the conditions under which the lease can be assigned to the franchisor, as this could impact their business operations and financial obligations. Franchisees should carefully review the terms of the lease and Franchise Agreement to understand their responsibilities and potential liabilities.