What form might Hyper Kidz require the franchisee and landlord to sign?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
You must select a site that you propose to use for your Franchised Business and you must submit to us all information we require to evaluate the site you propose. You may not obtain the site (by lease, sublease or purchase agreement) until the site has been approved by us. We have the right to review any lease, sublease or purchase agreement for the approved site before you sign it. At our request, you and your landlord must sign our form of Collateral Assignment of Lease, attached to the Franchise Agreement as Attachment 6.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–22)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, before a franchisee can secure a site for their Hyper Kidz location, Hyper Kidz has the right to review any lease, sublease, or purchase agreement. Furthermore, Hyper Kidz can request that both the franchisee and the landlord sign Hyper Kidz's standard Collateral Assignment of Lease form. This form is included as Attachment 6 to the Franchise Agreement.
This requirement ensures that Hyper Kidz maintains some control over the location of its franchises and the terms of the lease agreement. By having the right to review the lease and requiring a Collateral Assignment of Lease, Hyper Kidz can protect its interests in the event that a franchisee defaults on their lease or franchise agreement.
A Collateral Assignment of Lease essentially gives Hyper Kidz the right to step in and take over the lease if the franchisee fails to meet certain obligations. This is a fairly common practice in franchising, as it provides the franchisor with a degree of security and ensures that the location remains available for a potential replacement franchisee. Prospective franchisees should carefully review Attachment 6 to fully understand the implications of this requirement.