Is there a Collateral Assignment of Lease included as an attachment to the Hyper Kidz Franchise Agreement?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Hyper Kidz Franchise Disclosure Document, the franchise agreement requires the inclusion of a Collateral Assignment of Lease. Specifically, when a franchisee secures a site, the lease or sublease must include an executed copy of the Collateral Assignment of Lease, which is included as Attachment 6 to the Franchise Agreement.
This requirement ensures that Hyper Kidz has the right to assume the lease under certain conditions, such as the termination or expiration of the franchise agreement, without needing the lessor's consent. This provision protects Hyper Kidz's interests by allowing them to maintain control over the location and continue operations if the franchisee defaults or leaves the system.
Furthermore, the lease agreement must also provide Hyper Kidz with the right to receive notices of default, the option to cure any defaults by the franchisee, and access to sales and other information furnished by the franchisee to the lessor or sublessor. These stipulations enable Hyper Kidz to monitor the franchisee's compliance with the lease terms and take necessary actions to safeguard their investment and brand reputation. The lessor must also consent to the franchisee displaying Hyper Kidz's Marks and agree not to materially modify the lease without Hyper Kidz's prior written consent.