How does the loss of a lease affect a Kitchen Solvers franchise agreement?
Kitchen_Solvers Franchise · 2025 FDDAnswer from 2025 FDD Document
Appendix E to the Franchise Agreement
Collateral Assignment of Lease
COLLATERAL ASSIGNMENT OF LEASE
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).
Source: Item 22 — Contracts (FDD page 49)
What This Means (2025 FDD)
According to the 2025 Kitchen Solvers Franchise Disclosure Document, the franchise agreement includes a Collateral Assignment of Lease, outlined in Appendix E. This agreement involves the tenant (franchisee), KS LA CROSSE INVESTMENTS, LLC (franchisor), and the landlord. As a condition of entering into the Franchise Agreement, Kitchen Solvers requires the franchisee to assign their rights and interest in the lease as security for the franchisee's obligations and Kitchen Solvers' rights under the Franchise Agreement. This assignment gives Kitchen Solvers the right to reassign the lease. The franchisee retains the right to possess the premises until an Assignment Event occurs, as defined in the Collateral Assignment of Lease agreement.
This collateral assignment of lease protects Kitchen Solvers in the event a franchisee defaults on their obligations under the Franchise Agreement. If the franchisee fails to meet their obligations, Kitchen Solvers can step in and take over the lease, ensuring the location remains operational or is transferred to a new franchisee. This arrangement minimizes disruption to the Kitchen Solvers brand and customer base. The landlord consents to this arrangement, acknowledging that the assignment is contingent upon the terms, covenants, limitations, and conditions outlined in the agreement.
In practical terms, this means that if a Kitchen Solvers franchisee loses their lease due to any reason, such as failure to pay rent or violation of lease terms, Kitchen Solvers has the right to take over the lease. This protects Kitchen Solvers' interest in maintaining a presence in that location and allows them to continue operating a franchise at that site, either directly or through another franchisee. The franchisee is bound by the terms of the lease and the collateral assignment, which ensures Kitchen Solvers has recourse in the event of a lease termination.