Is Face Foundrie obligated to take assignment of any franchisee obligations under contracts after termination?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) at the option of Franchisor, assign to Franchisor any interest which Franchisee has in any lease or sublease for the Premises if Franchisee leases a location for the Facial Bar.
In the event Franchisor does not elect to exercise its option to acquire the lease or sublease for the Premises, Franchisee must, at Franchisee's expense, make such reasonable modifications to the exterior and interior décor of the Facial Bar and the Premises, and with respect to any vehicles, as Franchisor requires to eliminate its identification as a Face Foundrié Facial Bar.
If Franchisee fails to modify the exterior and interior décor of the Facial Bar, the Premises, and vehicles, as Franchisor requires to eliminate its identification as a Face Foundrié Facial Bar, Franchisor may take such action to modify the exterior and interior décor of the Facial Bar and the Premises and charge Franchisee for the cost of such action.
Franchisee shall immediately pay Franchisor for the cost of any action taken by Franchisor to modify the exterior and interior décor of the Facial Bar and the Premises;
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, Face Foundrie has the option, but not the obligation, to take over a franchisee's lease or sublease for the premises after termination. Specifically, the franchise agreement states that at the "option of Franchisor, assign to Franchisor any interest which Franchisee has in any lease or sublease for the Premises if Franchisee leases a location for the Facial Bar." If Face Foundrie does not exercise this option, the franchisee is responsible for modifying the premises to remove any identification as a Face Foundrie Facial Bar.
This clause is significant for prospective franchisees as it clarifies the post-termination responsibilities regarding the leased location. If Face Foundrie chooses not to take over the lease, the franchisee bears the financial burden of modifying the premises to eliminate any branding or identification with Face Foundrie. This could involve repainting, removing signage, and altering the interior décor. The franchisee must complete these modifications within a specified timeframe, or Face Foundrie may take action and charge the franchisee for the costs incurred.
Furthermore, the lease agreement includes a clause where the landlord acknowledges Face Foundrie's right to succeed to the tenant's (franchisee's) interest in the lease. The landlord consents to the collateral assignment of the lease to Face Foundrie and to Face Foundrie's or another franchisee's assignment of the lease. However, Face Foundrie is released from liability under the lease after such assignment. This arrangement provides Face Foundrie with flexibility in managing the location after a franchisee's termination, while also ensuring that the landlord is protected.
In summary, while Face Foundrie is not obligated to assume a franchisee's lease after termination, it retains the option to do so. If Face Foundrie declines this option, the franchisee is responsible for removing all traces of the Face Foundrie brand from the premises at their own expense. Prospective franchisees should carefully consider these post-termination obligations and their potential financial impact.