Is the Call Option granted to the Ella Cafe franchisor revocable?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
ent | | | 9743 W. Broward Blvd. | | Plantation, FL 33324
Attachment 5 to Franchise Agreement
RIDER TO LEASE AGREEMENT
| Landlord: | Franchisor: Ella Coffee Company, LLC |
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| Notice Address: | Notice Address: 9743 W. Broward Blvd., Plantation, FL 33324 Telephone: anthony@coolcoffee.com |
| Telephone: | Email: anthony@coolcoffee.com |
| Tenant: | |
| Leased Premises: | Effective Date: |
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- Use. Tenant is a franchisee of Franchisor. The Leased Premises shall be used only for the operation of an Ella Coffee House business (or any name authorized by Franchisor).
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- Notice of Default and Opportunity to Cure. Landlord shall provide Franchisor with copies of any written notice of default ("Default") given to Tenant under the Lease, and Landlord grants to Franchisor the option (but not the obligation) to cure any Default under the Lease (should Tenant fail to do so) within 10 days after the expiration of the period in which Tenant may cure the Default.
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- Termination of Lease. Landlord shall copy Franchisor on any notice of termination of the Lease. If Landlord terminates the Lease for Tenant's Default, Franchisor shall have the option to enter into a new Lease with Landlord on the same terms and conditions as the terminated Lease. To exercise this option, Franchisor must notify Landlord within 15 days after Franchisor receives notice of the termination of the Lease.
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- Termination of Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
Based on the 2024 Ella Cafe Franchise Disclosure Document, the franchisor has a call option under specific circumstances related to the lease agreement. Specifically, if the landlord terminates the lease due to the tenant/franchisee's default, Ella Cafe has the option to enter into a new lease with the landlord under the same terms as the original lease. To exercise this option, Ella Cafe must notify the landlord within 15 days of receiving notice of the lease termination. This call option ensures that Ella Cafe can maintain control over the location, which is critical for the franchise's operation.
Additionally, if the Franchise Agreement between Ella Cafe and the tenant is terminated for any reason during the lease term, Ella Cafe has the right to require the tenant to assign the lease to them. The landlord consents to this assignment. Furthermore, the franchisee authorizes the landlord and Ella Cafe to communicate directly about the franchisee and their business.
The FDD states that if a Ghost Kitchen exists in the Designated Area or Reserved Area at the time of execution of this Agreement, then Franchisee's consent is deemed to have been provided and cannot be revoked. This clause is the only instance where the term 'revoked' is used. The FDD does not explicitly state whether Ella Cafe's call option is revocable under other circumstances. A prospective franchisee should seek clarification from Ella Cafe regarding the conditions and revocability of the call option to fully understand their rights and obligations.