Under what circumstances does Dog Haus have the option to succeed to the franchisee's rights under the lease?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee does hereby grant to Franchisor an option, exercisable at any time within thirty (30) days after Franchisor's receipt of actual notice of the occurrence of any of the events described in Section 3.1 through Section 3.7 (the "Option"), to succeed to Franchisee's rights under the Lease and to obtain an assignment of the rights and obligations of Franchisee under the Lease to Franchisor (the "Assignment"). This Agreement shall remain in full force and effect, and the Option granted in this Section 2 shall remain exercisable by Franchisor, during the entire term of the Franchise Agreement and the Lease, including all extension terms and/or renewal terms of the Franchise Agreement and the Lease.
3. REQUIRED NOTICE; ASSIGNMENT ONLY EFFECTIVE UPON EXERCISE OF OPTION.
This Agreement shall be effective upon the Effective Date; however, the Assignment shall only become effective if, and when, Franchisor expressly exercises the Option in writing after the occurrence of one or more of the following events:
3.1 Franchise Agreement. The occurrence of (i) any acts which would result in the immediate termination of the Franchise Agreement; or (ii) the default by Franchisee in the performance of any of the terms or
obligations of the Franchise Agreement, which default is not cured within the applicable cure period set forth in the Franchise Agreement.
- 3.2 Lease.
The occurrence of (i) any acts which would result in the termination or merger of the Lease; or (ii) the default by Franchisee in the performance of any of the terms or obligations of the Lease which default is not cured within the applicable cure period set forth in the Lease.
- Sale of Restaurant.
If Franchisee, without the prior written consent of Franchisor, either (i) sells, 3.3 transfers, assigns, sublets or enters into any agreement to sell, transfer, assign or sublet any of its right, title or interest in and to the Dog Haus Restaurant, including any transfer, assignment or sublet of the Franchise Agreement, the Lease or any of the operating assets of the Dog Haus Restaurant; or (ii) amends the Lease in any manner which would impair the value of the security granted by this Agreement or which would materially affect the rights of Franchisor under this Agreement.
- 3.4 Failure to Exercise Option to Renew or Extend.
If Franchisee shall fail to exercise any option to renew or extend the term of the Lease.
- 3.5 Insolvency.
If Franchisee (i) is adjudicated insolvent or makes an assignment for the benefit of creditors; or (ii) Franchisee applies for or consents to the appointment of a custodian, receiver, trustee or similar officer for it or for all or any substantial part of its property; or (iii) if such a custodian, receiver, trustee or similar officer is appointed without the application or consent of Franchisee, and such appointment continues undischarged for a period of sixty (60) days.
- 3.6 Bankruptcy.
Source: Item 23 — RECEIPTS (FDD pages 87–328)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, Dog Haus has the option to succeed to the franchisee's rights under the lease if certain events occur. Specifically, Dog Haus can exercise this option within thirty (30) days after receiving notice of any of the events described in Sections 3.1 through 3.7 of the agreement.
These events include situations where there are acts that would result in the immediate termination of the Franchise Agreement, or if the franchisee defaults on their obligations under the Franchise Agreement and fails to cure the default within the specified cure period. The option also becomes available if there are actions that could lead to the termination or merger of the lease, or if the franchisee defaults on their lease obligations and fails to cure the default within the lease's cure period.
Furthermore, Dog Haus can exercise its option if the franchisee attempts to sell, transfer, assign, sublet, or enter into any agreement to do the same with any rights to the Dog Haus Restaurant without prior written consent from Dog Haus. This also applies if the franchisee amends the lease in a way that would impair the value of the security granted by the agreement or materially affect Dog Haus's rights. Finally, failure by the franchisee to exercise any option to renew or extend the term of the lease, or franchisee insolvency or bankruptcy can trigger Dog Haus's option to succeed to the lease.