If an Even Hotels franchisee rents equipment, what obligation remains after the Agreement is terminated?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
Unless otherwise agreed in writing, the Equipment will also include, where applicable, all permanent merchandising, menu boards, refrigeration units, ice makers and water filtration equipment installed by Company on Equipment Lessee's premises.
Each piece of Equipment is leased commencing on its installation date (the "Commencement Date").
Equipment Lessee may request the removal of any Equipment upon thirty (30) days prior written notice to Company, and in addition, Company may remove any piece of Equipment for any reason upon thirty (30) days prior written notice to Customer.
Removal of Equipment will not affect the term of any agreement between the parties.
If this Lease is terminated with respect to any piece of Equipment for any reason, other than Company removing a piece of Equipment without cause under this section, prior to 100 months from the Commencement Date for that piece of Equipment, Equipment Lessee will pay Company the actual cost of removal (including standard shipping and handling charges) and remanufacturing of that Equipment, as well as the unamortized portion of the costs of (i) installation, (ii) non-serialized parts (e.g., pumps, racks and regulators) and other ancillary equipment.
Collectively, removal costs and items (i) and (ii) are referred to as "unbundling costs." The terms of this Lease will continue in effect with respect to each piece of Equipment until the Equipment has been removed from Equipment Lessee's premises and will survive the expiration or termination of any agreement into which this Lease is incorporated.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, if a franchisee leases equipment and the lease is terminated before 100 months from the commencement date, the franchisee, referred to as the Equipment Lessee, must pay certain costs to the company. These costs include the actual cost of removal, covering standard shipping and handling charges, and the remanufacturing of the equipment. Additionally, the franchisee is responsible for the unamortized portion of the costs associated with the installation and non-serialized parts, such as pumps, racks, regulators, and other ancillary equipment. These costs are collectively termed "unbundling costs."
Even after the termination of any agreement into which the lease is incorporated, the terms of the lease remain in effect until the equipment is removed from the franchisee's premises. This means that even after the franchise agreement ends, the franchisee is still obligated to ensure the equipment is removed and to cover the associated expenses. This provision ensures that Even Hotels recovers the costs associated with the equipment's removal and any remaining value from its installation and components.
However, there is an exception: if Even Hotels removes a piece of equipment without cause, the franchisee is not responsible for these costs. This protects the franchisee from incurring expenses when the removal is not due to their actions or a breach of the agreement. This clause highlights the importance of understanding the terms of the equipment lease agreement and the conditions under which termination costs may apply.