Must an Ella Cafe franchisee comply with their location's lease agreement?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
- 7.19 Suppliers and Landlord. Franchisee shall pay all vendors and suppliers in a timely manner. If Franchisee leases the Location, Franchisee shall comply with its lease for the Location.
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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. 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)
According to Ella Cafe's 2024 Franchise Disclosure Document, if a franchisee leases their location, they must comply with the lease agreement. This requirement is part of the franchisee's obligations under the franchise agreement. Failing to comply with the lease could result in consequences such as eviction or legal action from the landlord, which would negatively impact the franchisee's ability to operate the Ella Cafe business.
This provision ensures that Ella Cafe franchisees maintain a good relationship with their landlords and uphold the standards expected of the brand. Compliance with the lease agreement includes paying rent on time, maintaining the premises in good condition, and adhering to any other terms outlined in the lease.
Additionally, the FDD states that the landlord must provide Ella Cafe with copies of any default notices given to the tenant (franchisee) and grants Ella Cafe the option to cure any default under the lease if the tenant fails to do so within 10 days after the expiration of the period in which the tenant may cure the default. The landlord must also copy Ella Cafe on any notice of termination of the lease. If the landlord terminates the lease for the tenant's default, Ella Cafe has the option to enter into a new lease with the landlord on the same terms and conditions as the terminated lease, provided Ella Cafe notifies the landlord within 15 days after receiving notice of the termination of the lease. These stipulations protect Ella Cafe's interests in the event a franchisee fails to meet their lease obligations.
Furthermore, the FDD outlines that if the Franchise Agreement between Ella Cafe and the tenant is terminated during the term of the lease for any reason, Ella Cafe has the right to require the tenant to assign the lease to Ella Cafe, with the landlord's consent. The tenant also has the right to assign or sublet the lease to Ella Cafe, provided that such assignment or sublease does not relieve the tenant or any guarantor of liability under the lease. If Ella Cafe becomes the lessee of the leased premises, Ella Cafe has the right to assign or sublease its lease to a franchisee of the Ella Cafe brand. These conditions provide Ella Cafe with flexibility and control over the location of its franchises.