Does Kitchen Solvers have responsibility for the lease agreement of a franchisee's location?
Kitchen_Solvers Franchise · 2025 FDDAnswer from 2025 FDD Document
Its: Its:
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 Kitchen Solvers' 2025 Franchise Disclosure Document, the franchisee (referred to as "Tenant" in the agreement) typically enters into a lease agreement with a landlord for the premises from which they will operate their Kitchen Solvers franchise. However, Kitchen Solvers requires the franchisee to sign a Collateral Assignment of Lease as a condition of entering into the Franchise Agreement. This assignment serves as security for the franchisee's obligations and Kitchen Solvers' rights under the Franchise Agreement.
Under the Collateral Assignment of Lease, the franchisee assigns their rights and interest in the lease to Kitchen Solvers, with the right to reassign. Despite this assignment, the franchisee retains the right to possess the premises according to the terms of the lease until an "Assignment Event" occurs, as defined in the agreement. This means that while Kitchen Solvers holds a security interest in the lease, the franchisee maintains control of the premises as long as they are compliant with both the lease and the Franchise Agreement.
The document outlines that this arrangement is made with the consent of the landlord and is contingent upon specific terms, covenants, limitations, and conditions. This suggests that the landlord is aware of and agrees to the collateral assignment of the lease to Kitchen Solvers. The purpose of this assignment is to protect Kitchen Solvers' interests in the event the franchisee defaults on their obligations under the Franchise Agreement. Therefore, Kitchen Solvers does not assume the lease agreement initially, but may gain control of it if the franchisee fails to meet their obligations.