What does Ella Cafe's lease approval guarantee for the franchisee?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
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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. 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. Any provision of the Lease which limits Tenant's right to own or operate other ELLA Coffee House Coffee Houses in proximity to the Leased Premises shall not apply to Franchisor.
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- Authorization. Tenant authorizes Landlord and Franchisor to communicate directly with each other about Tenant and Tenant's business.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
According to Ella Cafe's 2024 Franchise Disclosure Document, the contracts section outlines several lease-related provisions that benefit both the franchisee and Ella Cafe. While it doesn't guarantee lease approval, it does provide certain protections and options once a lease is in place. Specifically, the landlord is required to provide Ella Cafe with copies of any default notices issued to the franchisee and allows Ella Cafe the option, but not the obligation, to cure the default within 10 days after the franchisee's cure period expires. This gives Ella Cafe a chance to step in and prevent a lease termination if the franchisee fails to meet their obligations.
Additionally, if the landlord terminates the lease due to the franchisee'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 of receiving notice of the lease termination. This provision ensures that Ella Cafe can maintain a presence at the location even if the original franchisee fails. Furthermore, if the franchise agreement is terminated, Ella Cafe has the right to require the franchisee to assign the lease to them, with the landlord's consent already secured.
Finally, the franchisee has the right to assign or sublet the lease to Ella Cafe, although this does not relieve the franchisee of their liability under the lease. If Ella Cafe becomes the lessee, they can then assign or sublease the lease to another Ella Cafe franchisee. Any lease provisions limiting the franchisee's ability to operate other Ella Cafe locations nearby do not apply to Ella Cafe itself. These stipulations collectively provide Ella Cafe with significant control and flexibility over the leased premises, safeguarding their brand's presence and continuity of operations at the location. The franchisee authorizes the landlord and Ella Cafe to communicate directly about the franchisee and their business, facilitating transparency and cooperation.