What is the purpose of the Collateral Assignment of Lease for a Kitchen Solvers franchise?
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).
Source: Item 22 — Contracts (FDD page 49)
What This Means (2025 FDD)
According to the 2025 Kitchen Solvers Franchise Disclosure Document, the Collateral Assignment of Lease is used to secure the tenant's (franchisee's) obligations and the franchisor's rights under the Franchise Agreement. As a condition of entering into the Franchise Agreement, Kitchen Solvers requires the franchisee to assign their rights and interest in the lease to KS LA CROSSE INVESTMENTS, LLC, with the right to reassign, as security. This assignment is made with the landlord's consent and is contingent upon specific terms, covenants, limitations, and conditions.
In practical terms, this means that if a Kitchen Solvers franchisee fails to meet their obligations under the Franchise Agreement, Kitchen Solvers has the right to take over the lease for the business premises. This protects Kitchen Solvers' interests by ensuring they can continue operating a franchise at that location if the franchisee defaults. The franchisee retains the right to possess the premises as long as they comply with the lease terms and until an 'Assignment Event' occurs, as defined in the agreement.
This type of collateral assignment is a fairly common practice in franchising, as it provides the franchisor with additional security and control over the franchise location. Prospective Kitchen Solvers franchisees should carefully review the terms of the Collateral Assignment of Lease and understand the conditions under which Kitchen Solvers could take over the lease. It is also important to understand what constitutes an 'Assignment Event' as defined in paragraph 2 of the agreement, as this will trigger the franchisor's right to take possession of the lease.