What is the significance of the phrase 'with the right to reassign' in the Collateral Assignment of Lease for a Kitchen Solvers franchise?
Kitchen_Solvers Franchise · 2025 FDDAnswer from 2025 FDD Document
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).
Assignment Events. 2. 2.1 shall have the right to exercise either of the options set forth in paragraphs 2.1(i) or 2.1(ii) below upon: (a) Franchisor's declaration of a default Tenant under
the Franchise Agreement which remains uncured beyond all applicable notice and cure periods; (b) the expiration or earlier termination of the Franchise Agreement; or (c) an expression by Tenant
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. N
Source: Item 22 — Contracts (FDD page 49)
What This Means (2025 FDD)
According to the 2025 Kitchen Solvers Franchise Disclosure Document, the phrase "with the right to reassign" in the Collateral Assignment of Lease is significant because it grants Kitchen Solvers the option to transfer the lease to another party under certain conditions. Specifically, Kitchen Solvers, as the franchisor, requires the tenant (franchisee) to assign their rights and interest in the lease as security for the franchisee's obligations and the franchisor's rights under the Franchise Agreement. This assignment is conditional and includes the right for Kitchen Solvers to reassign the lease.
This right to reassign becomes relevant upon the occurrence of an "Assignment Event," which includes the franchisor's declaration of a default by the franchisee that remains uncured, the expiration or earlier termination of the Franchise Agreement, or the franchisee's expression of a desire to terminate the lease. Upon such an event, Kitchen Solvers has the option to either assume and occupy the premises themselves or assign the lease to an affiliate or an approved Kitchen Solvers franchisee without needing the landlord's prior written consent. However, if the lease is assigned to another franchisee, that franchisee must have a net worth equal to or greater than the original franchisee's net worth at the time of the lease execution, assume all of the original franchisee's obligations under the lease, and complete Kitchen Solvers' initial training program.
The inclusion of the "right to reassign" provides Kitchen Solvers with flexibility in managing the lease in the event of franchisee default or termination. It allows Kitchen Solvers to maintain control over the location and ensure continued operation of a Kitchen Solvers franchise at that site, either by operating it themselves or by transferring it to a qualified franchisee. Despite the reassignment, the original franchisee remains obligated under the lease and liable to Kitchen Solvers for all rent and other lease obligations paid by Kitchen Solvers. The landlord agrees not to terminate or accelerate the rent owed under the lease as long as Kitchen Solvers, or its franchisee, assumes the obligations of the original franchisee in writing.