Under the Conditional Assignment of Lease, what rights are assigned to Fat Shack Inc.?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
| day of, 202 by and between | THIS CONDITIONAL ASSIGNMENT OF LEASE ("Assignment") is made as of this , a |
|---|---|
| ("Assignor"), FAT SHACK INC., a Delaware corporation ("Assignee") and , a ("Landlord"). WHEREAS, Assignor is a tenant of certain property generally known as , located in the City of , State | |
| of Assignor, dated | ("Property"), pursuant to a lease by and between Landlord and , 202 (the "Lease"); WHEREAS, Assignor desires to construct, or have constructed by Landlord (whichever is applicable), and thereafter operate a FAT SHACK Restaurant under a certain franchise agreement between Assignor and Assignee (the "Franchise Agreement"); and WHEREAS, as a condition to the grant of rights under the Franchise Agreement to Assignor, Assignee requires that Assignor enter into this Assignment. NOW, THEREFORE, for and in consideration of the sum of Ten Dollars and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: |
| 1. | Assignor hereby assigns all of its right, title and interest in and to the Lease and the FAT |
| SHACK Restaurant to Assignee. | |
| 2. | With the exception of Assignee's rights under paragraph 3 below and Assignor's and Landlord's respective obligations, representations and covenants under paragraphs 3, 4, 8, 9 and 10 below, the Conditional Assignment of lease contemplated hereunder is expressly conditioned upon, and shall not be effective and Assignee shall have no right to pursue any remedy hereunder unless and until: |
| (a) | Default by Assignor under the terms of the Lease, which default (i) is not cured by Assignor within the time limits provided therein or (ii) results in a demand for performance by Assignee under any guaranty of the Lease; or |
| (b) | Default by Assignor under the terms of the Franchise Agreement or under any document or instrument securing the Franchise Agreement, which default is not cured by Assignor within the time limits provided therein; or |
| (c) | Voluntary institution of any insolvency or bankruptcy proceedings as a debtor or involuntary insolvency or bankruptcy proceedings brought against Assignor which are not dismissed within 60 days of the filing thereof; or |
| (d) | Discontinuation by the Assignor of operation of the FAT SHACK Restaurant to be located on the Property, whether voluntarily or involuntarily; or |
| (e) | Nonrenewal by Assignor of the Franchise Agreement; or |
| (f) | Nonrenewal by Assignor of the Lease. |
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to the 2025 Fat Shack FDD, a Conditional Assignment of Lease outlines the rights assigned to Fat Shack Inc. as the Assignee, concerning the lease agreement between the franchisee (Assignor) and the landlord. Fat Shack requires this assignment as a condition for granting franchise rights to the franchisee. The franchisee assigns all rights, title, and interest in the lease and the Fat Shack restaurant to Fat Shack Inc. However, this assignment is conditional and only becomes effective under specific circumstances.
Fat Shack's rights under the lease become active only upon the occurrence of certain events, such as the franchisee defaulting on the lease terms and failing to cure the default within the specified time, defaulting on the Franchise Agreement, or the franchisee discontinuing operation of the Fat Shack restaurant. It also includes situations where the franchisee voluntarily enters insolvency or bankruptcy proceedings, or fails to renew either the Franchise Agreement or the lease.
Upon the assignment becoming effective, Fat Shack assumes all the franchisee's rights, duties, responsibilities, and obligations under the lease. The landlord consents to these terms and agrees that Fat Shack can sublease or further assign the lease to another Fat Shack franchisee without requiring additional consent, or to another party acceptable to the landlord. This conditional assignment ensures that Fat Shack can maintain control over the restaurant location and operations if the franchisee fails to meet their obligations, providing a safety net for the brand and its real estate interests.