Who is considered the 'you' in the Lees Famous Recipe Guaranty and Assumption of Obligations?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
d agree that, following the effective date of any such assignment, you will look solely to the transferee or assignee, and not to us, for the performance of all obligations under this Agreement. Separately, we may assign or delegate to an affiliate or other third party certain of our obligations under this Agreement without assigning our interest in this Agreement. In such instance, we will remain the party ultimately responsible for the performance of such obligation(s).
- B. Assignment to Wholly Owned Entity. You (as an individual) may assign this Agreement to a corporation or a limited liability company that conducts no business other than the Restaurant (or other Lee's Famous Recipe Restaurants under franchise agreements with us), provided: (1) the Restaurant is actively managed by you or an operating manager approved by us; (2) you own one hundred percent (100%) of the ownership interest in the corporation or limited liability company; (3) you and all Principal Owners of the assignee entity sign the Guaranty attached hereto as Exhibit D; (4) you provide us thirty (30) days' written notice before the proposed date of assignment of this Agreement to the corporation or limited liability company; and (5) you provide us a certified copy of the articles of incorporation, operation agreement, organizational documents, and a list of all shareholders or members having beneficial ownership, reflecting their respective interest in the assignee entity.
- C. Your Assignment or Sale of Substantially all of Your Assets.
Source: Item 22 — CONTRACTS (FDD pages 69–70)
What This Means (2025 FDD)
According to Lees Famous Recipe's 2025 Franchise Disclosure Document, the 'you' in the context of the Guaranty and Assumption of Obligations refers to the franchisee. Specifically, this applies when the franchisee is assigning the Franchise Agreement to a corporation or limited liability company. In this scenario, the franchisee (as an individual) may assign the agreement, provided certain conditions are met.
These conditions include that the restaurant is actively managed by the franchisee or an approved operating manager, the franchisee owns 100% of the ownership interest in the corporation or LLC, and the franchisee and all principal owners of the assignee entity sign the Guaranty attached as Exhibit D. Additionally, the franchisee must provide Lees Famous Recipe with 30 days' written notice before the assignment and a certified copy of the entity's organizational documents.
Furthermore, the 'you' also refers to the franchisee (and their Principal Owners) when discussing the transfer, assignment, or disposal of the business, the Restaurant, substantially all assets of the Restaurant, the Franchise Agreement, or any equity or voting interest. In such cases, the franchisee needs to obtain Lees Famous Recipe's prior written consent for any such transfer or assignment.