How long does the landlord have to provide notice of lease termination to Exit after a triggering event?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
The lease agreement contains the landlord's option to terminate the current lease if the premises are: (i) rendered wholly untenantable, or (ii) damaged as a result of any cause which is not covered by insurance then in full force and effect naming the landlord as the insured, or (iii) damaged or destroyed in whole or in part during the last two lease years, or (iv) if the building in which the premises are located is damaged to the extent of 50% or more of the landlord's gross leasable area, then, in any such event, the landlord may elect to terminate the lease by giving the Company notice of such election within 120 days after the occurrence of such an event.
In the event that the Company remains in possession of the premises after the termination date without execution of a new lease, it shall be deemed to be occupying the premises as a tenant from month to month, at 150% of the annual minimum rent and a percentage rent and subject to all other conditions, provisions, and obligations of the lease; provided, that percentage rent for such hold-over period shall be calculated using the annual minimum rent for the last lease year of the term and not the annual minimum rent payable for such hold-over period.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the landlord has 120 days to provide notice of lease termination after certain triggering events. These events include the premises being wholly untenantable, damage due to causes not covered by insurance, damage or destruction during the last two lease years, or damage to the building exceeding 50% of the landlord's gross leasable area.
This 120-day notice period is significant for a prospective Exit franchisee because it dictates the timeframe within which they might need to find a new location if the landlord decides to terminate the lease due to unforeseen circumstances. It provides a limited window to secure alternative premises and minimize disruption to the business.
It's also important to note what happens if Exit remains in possession after the termination date. Without a new lease, Exit will be considered a month-to-month tenant, with rent set at 150% of the annual minimum, plus percentage rent, and subject to all other original lease conditions. This hold-over provision could significantly increase costs and should be carefully considered.
Prospective franchisees should carefully review the lease agreement and understand the conditions under which the landlord can terminate the lease, as well as the financial implications of a hold-over situation. Understanding these terms is crucial for mitigating potential risks associated with lease termination.