What consideration does Ella Cafe provide to the franchisee for the call right?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
ritten 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. If the Franchise Agreement between Franchisor and Tenant is terminated during the term of the Lease for any reason, then upon the written request of Franchisor, Franchisor shall have the right (but not the obligation) to require Tenant to assign the Lease to Franchisor. Landlord hereby consents to the assignment of the Lease to Franchisor.
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- Assignment and Subletting. Notwithstanding any provision of the Lease to the contrary, Tenant shall have the right to assign or sublet the Lease to Franchisor, provided that no such assignment or sublease shall relieve Tenant or any guarantor of liability under the Lease. If Franchisor becomes the lessee of the Leased Premises, then Franchisor shall have the right to assign or sublease its lease to a franchisee of the ELLA brand.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
Based on the 2024 Ella Cafe Franchise Disclosure Document, if the franchise agreement between Ella Cafe and the tenant is terminated during the lease term, Ella Cafe has the right, but not the obligation, to require the tenant to assign the lease to Ella Cafe. The landlord consents to this assignment. This clause protects Ella Cafe's interest in maintaining a location for an Ella Cafe business, even if the original franchisee's agreement is terminated.
Furthermore, if the landlord terminates the lease due to the tenant's default, Ella Cafe has the option to enter into a new lease with the landlord under the same terms and conditions as the original lease. To exercise this option, Ella Cafe must notify the landlord within 15 days after receiving notice of the lease termination. This provides Ella Cafe with a safety net, allowing them to continue operations at a location even if the franchisee fails to meet their lease obligations.
In the event that Ella Cafe becomes the lessee, they have the right to assign or sublease the premises to another Ella Cafe franchisee. Additionally, any lease provisions limiting the tenant's right to own or operate other Ella Cafe locations in proximity to the leased premises do not apply to Ella Cafe itself. This ensures Ella Cafe has maximum flexibility in managing and assigning the lease as needed to maintain its brand presence and operational efficiency.