What is the obligation of the Assignee after further assigning the Lease to another party for a Hyper Kidz franchise?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
failure of the Site to meet your expectations as to revenue, operational performance or other measures. You further acknowledge and agree that your acceptance of a Franchise for the operation of the Hyper Kidz Business at the Site is based on your own independent investigation of the suitability of the Site.
4.2 Approval of Lease
4.2.1 Upon our approval of a proposed site, you will attempt to obtain lawful possession of the approved Site through your direct purchase, lease or sublease. The lease or sublease for the Site shall be in a form satisfactory to us and: (a) provide for concurrent, written notice to us of your default under said lease or sublease; (b) provide for our right, in our sole discretion, to cure your default under said lease or sublease; (c) provide for your right to assign your interest under said lease or sublease to us without the lessor's or sublessor's consent; (d) authorize and require the lessor or sublessor to disclose to us upon our request sales and other information furnished to the lessor or sublessor by you; (e) provide that we shall have the right, in our sole discretion, upon termination of this Agreement or expiration of this Agreement, without the grant of a successor franchise, to assume said lease or sublease; (f) provide for the lessor's or sublessor's consent to your display of the Marks in accordance with our specifications, subject only to applicable law; (g) provide that it may not be materially modified without our prior written consent and that we will receive copies of such modifications when proposed and when executed; and (h) include an executed copy of the Collateral Assignment of Lease, which is attached hereto as Attachment 6, or a substantially similar form.
4.2.2 You will deliver to us for review a copy of the lease, sublease or purchase agreement for the Site. You agree that you will not execute a lease, sublease or purchase agreement without our prior written approval of its terms.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
Based on the 2024 Hyper Kidz Franchise Disclosure Document, the document does not specify the obligations of an assignee after further assigning a lease to another party. The FDD does outline general conditions regarding lease agreements and transfers, but it does not explicitly address the scenario where an assignee re-assigns the lease.
Item 4.2.1 discusses the approval of the lease, stating that the lease or sublease for the site must be in a form satisfactory to the franchisor and include certain provisions, such as concurrent written notice of default, the franchisor's right to cure defaults, and the right to assign the lease to the franchisor. Item 16.1 states that the franchisor has the right to assign the agreement and attendant rights to another entity if the assignee is financially responsible and agrees to perform the obligations.
Since the obligations of an assignee after further assigning the lease are not detailed in the FDD, it is important for a prospective franchisee to seek clarification from the franchisor. Specifically, they should ask about any potential liabilities or responsibilities they might have if they, as an assignee, decide to transfer the lease to another party in the future. Understanding these obligations is crucial for making an informed decision about investing in a Hyper Kidz franchise.