What happens if a Floyds 99 franchisee defaults under the lease?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
itten approval before executing any lease, including all lease amendments, for the Franchised Location. If the Franchisee is purchasing real property for the Franchised Location, the Franchisee shall obtain the Franchisor's prior written approval of the purchase agreement before it is signed. The lease for the Franchised Location shall contain provisions set forth in detail in the Operations Manual (defined in Section 8.1 below), which may include the following: (1) providing for an initial term, or an initial term together with any renewal terms (for which rent must be specified in the lease) of at least 10 years; (2) expressing the landlord's consent to the Franchisee's use of the Marks and all required signage for the Barbershop; (3) giving the Franchisor the right to enter the premises and make any modification necessary to protect the Marks and the Licensed Methods; (4) allowing the Franchisor, or its designee, to have the option to assume the lease and the right following such assumption to assign the lease or sublet the leased premises to another FLOYD'S 99 franchisee for all or any part of the lease term without further landlord consent if the Franchisee defaults under the lease or this Agreement or if this Agreement terminates or expires; (5) requiring the landlord to give the Franchisor written notice of any defaults by the Franchisee under such lease and the right to cure any such defaults; and (6) the lease shall also contain restrictive use clauses which are acceptable to the Franchisor. The Franchisor reserves the right to require the Franchisee to use the Franchisor's standard form of lease instead of adding the required provisions to the landlord's form of lease, in the Franchisor's sole discretion. The lease shall be conditionally assigned to the Franchisor as security for the Franchisee's timely performance of all obligations under this Agreement and the lease. The Franchisee shall enter into Franchisor's standard Conditional Assignment of Lease. In addition, the Franchisee shall obtain the landlord's consent to the terms of the Franchisor's standard form of Lease Addendum or incorporate the Franchisor's required terms into the lease or obtain the landlord's consent to the terms of the Franchisor's standard form of lease, whichever is applicable.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to Floyds 99's 2025 Franchise Disclosure Document, if a franchisee defaults under the terms of their lease agreement, several actions can be taken. Floyds 99 requires that all leases for franchised locations include specific provisions that protect the franchisor's interests. These provisions include the landlord notifying Floyds 99 of any franchisee defaults and giving Floyds 99 the right to cure those defaults. Additionally, the lease must allow Floyds 99 the option to assume the lease if the franchisee defaults, and subsequently assign or sublet the premises to another franchisee without needing the landlord's consent. The lease is conditionally assigned to Floyds 99 as security for the franchisee's obligations under the franchise agreement and the lease itself. Floyds 99 also retains the right to enter the premises and make modifications to protect its marks and licensed methods.
Furthermore, a franchisee's default under a lease agreement constitutes a breach of the franchise agreement. Floyds 99 has the right to terminate the franchise agreement if the franchisee defaults under any sublease or lease assignment for the franchised location, provided the default is not cured within the time specified in the lease. In the event of a default, Floyds 99 is obligated to provide the franchisee with the same cure rights as stipulated in the franchise agreement.
In addition to lease-related defaults, Floyds 99 can terminate the franchise agreement, without opportunity to cure, upon written notice if the franchisee abandons the shop for three consecutive days (or a shorter period indicating intent to discontinue operation), becomes insolvent, is convicted of a felony, or engages in unauthorized transfers. Floyds 99 can also terminate with 30 days' notice if the franchisee fails to maintain standards, engages in deceptive practices, fails to obtain required consent, fails to comply with the operations manual, or breaches any related agreement, provided the franchisee fails to cure the default within the 30-day period. Floyds 99 also has management rights, allowing them to appoint an interim Principal Manager to operate the shop if it is not being managed properly or if a default occurs, charging a reasonable management fee in addition to royalties and other amounts due.