What is the effect of the Collateral Assignment of Lease on the Kitchen Solvers franchisee's obligations to the Landlord?
Kitchen_Solvers Franchise · 2025 FDDAnswer from 2025 FDD Document
THIS COLLATERAL ASSIGNMENT OF LEASE is made as of the last date below written by and among ("Tenant"), KS LA CROSSE INVESTMENTS, LLC ("Franchisor"), and ("Landlord").
WHEREAS, Tenant is the tenant under a certain lease (or sublease), dated (the "Lease"), wherein Landlord leased to Tenant certain premises at (the "Premises"); and WHEREAS, Tenant and have, or will, enter into a Franchise Agreement (the "Franchise Agreement"), whereby will grant to Tenant the right to open and operate a KITCHEN SOLVERS® franchised business under Franchisor's system at the Premises; and WHEREAS, as a condition to entering into the Franchise Agreement, has required that Tenant assign its right, and interest in the Lease, with the right to reassign (as provided therein), as security for Tenant's obligations and Franchisor's rights under the Franchise Agreement; and WHEREAS, in order to induce to enter into the Franchise Agreement, Tenant has agreed to assign its right, and interest in the Lease, with the right to reassign (as provided therein), as security for Tenant's obligations and Franchisor's rights under the Franchise Agreement.
NOW THEREFORE, in consideration for the foregoing premises and the mutual promises contained herein and in the Franchise Agreement, and in order to secure Tenant's obligations and Franchisor'srights under the Franchise Agreement, Tenant does hereby collaterally assign, transfer and set over unto Franchisor, with the right to reassign (as provided herein), all of its right, and interest in and to the Lease and in and to the Premises; it being nevertheless expressly understood and agreed that this assignment is made and is consented to the Landlord contingent upon the following terms, covenants, limitations and conditions: Tenant's Right to Possession.
Tenant shall retain right to possession of the 1.
Premises in accordance with the terms and conditions of the Lease until the occurrence of an Assignment Event (as defined in paragraph 2 of this Agreement).
of its desire to terminate the Lease (each an "Assignment Event"). Upon the occurrence of an Assignment Event, Franchisor shall have the option to either:
- (i) assume and occupy the Premises upon written notice to Landlord and Tenant, in which event Franchisor shall be deemed to be substituted as the tenant under the Lease in the place and stead of Tenant and shall be deemed to have assumed expressly all of the terms, covenants and obligations of the Lease theretofore applicable to Tenant and shall likewise be entitled to enjoy all of the rights and privileges granted to Tenant under the terms and conditions of the Lease; or
- (ii) assign the Lease to an affiliate or an approved System franchisee, without obtaining Landlord's prior written consent, provided that, in the event of an assignment to a franchisee, such franchisee: (a) has a net worth equal to or greater than the net worth of Tenant at the time of Lease execution; (b) assumes all of Tenant's obligations under the Lease; and (c) completes Franchisor's initial training program to Franchisor's satisfaction.
- 2.2 If Franchisor exercises either of the rights set forth in paragraphs 2.1(i) or 2.1(ii) above, Tenant shall remain obligated under the Lease and Tenant shall be liable to Franchisor for all payments by Franchisor for rent and other Lease obligations. The parties acknowledge that such payments are reasonable expenses of foreclosure.
- 2.3 If Franchisor exercises either of the rights set forth in paragraphs 2.1(i) or 2.1(ii) above, Landlord shall not terminate or accelerate the rent owed under the Lease in connection with any such assignment, so long as Franchisor, or its franchisee, assumes, in writing, the obligations of Tenant under the Lease. Nothing in this Paragraph 2.3 shall serve to extend the term of the Lease or provide Franchisor with occupancy rights, options to renew or other rights not expressly set forth to Tenant in the Lease.
Source: Item 22 — Contracts (FDD page 49)
What This Means (2025 FDD)
According to Kitchen Solvers' 2025 Franchise Disclosure Document, the Collateral Assignment of Lease is an agreement among the tenant (franchisee), KS LA CROSSE INVESTMENTS, LLC (franchisor), and the landlord. This agreement is a condition of entering into the Franchise Agreement, where the franchisee assigns their rights and interest in the lease to Kitchen Solvers as security for the franchisee's obligations and Kitchen Solvers' rights under the Franchise Agreement.
The franchisee retains the right to possess the premises according to the lease terms until an "Assignment Event" occurs, which includes termination of the Franchise Agreement or the franchisee's desire to terminate the lease. Upon such an event, Kitchen Solvers has the option to assume the lease, becoming the tenant and taking on all obligations, or assign the lease to an affiliate or approved Kitchen Solvers franchisee.
Even if Kitchen Solvers exercises its right to assume or assign the lease, the original franchisee remains obligated under the lease and is liable to Kitchen Solvers for all rent and other lease obligations paid by Kitchen Solvers. However, the landlord cannot terminate or accelerate the rent owed if Kitchen Solvers or its franchisee assumes the franchisee's obligations in writing. This assignment does not extend the lease term or provide Kitchen Solvers with any occupancy rights beyond those initially granted to the franchisee in the original lease.