Is the lease conditionally assigned to Floyds 99 as security?

According to the 2025 Floyds 99 Franchise Disclosure Document, the lease for the franchised location will be conditionally assigned to Floyds 99 as security. This conditional assignment serves as a security measure for the franchisee's timely fulfillment of all obligations outlined in both the franchise agreement and the lease agreement. The franchisee is required to enter into Floyds 99's standard Conditional Assignment of Lease agreement.

This arrangement means that while the franchisee operates the location, Floyds 99 has a security interest in the lease. This protects Floyds 99 in case the franchisee fails to meet their obligations under the franchise agreement or the lease itself. It is a fairly common practice in franchising to ensure the franchisee adheres to the terms of the agreement and maintains the standards of the franchise system.

In practical terms, if a Floyds 99 franchisee defaults on their obligations, Floyds 99 has the right to step in and assume control of the lease. This could involve taking over the location or assigning the lease to another franchisee. This provision is designed to minimize disruption to the Floyds 99 brand and ensure continued operation of the business at that location. Prospective franchisees should carefully review the standard Conditional Assignment of Lease to fully understand their obligations and the circumstances under which Floyds 99 could exercise its rights under the assignment.