Is a collateral assignment of lease included in the Management Recruiters Franchise Agreement?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
ITEM 22: CONTRACTS
Copies of all the agreements regarding our franchise offering are attached as Exhibit A, Franchise Agreement. The Franchise Agreement includes (a) a nondisclosure and noncompetition agreement; (b) a computer services agreement; (c) a franchise payroll funding agreement; (d) a guaranty agreement; (e) an agreement to arbitrate franchisee disputes; (f) a collateral assignment of lease; (g) a collateral assignment of telephone numbers and listings; and (h) a back-office services agreement.
Source: Item 22 — CONTRACTS (FDD pages 66–67)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, a collateral assignment of lease is included in the franchise agreement. Item 22 explicitly states that copies of all agreements regarding the franchise offering are attached as Exhibit A, which includes the Franchise Agreement. This agreement encompasses several sub-agreements, including a collateral assignment of lease.
Exhibit F of Item 23 provides a sample Collateral Assignment of Lease agreement. This agreement, when executed, assigns the franchisee's rights, title, and interest in the lease to Management Recruiters as collateral. This collateral serves as security for any obligations, liabilities, or amounts the franchisee owes to the lessor under the lease, as well as for any breach of the lease terms or the Franchise Agreement itself.
In the event the franchisee defaults on the lease or Management Recruiters makes a payment to the lessor due to the franchisee's breach, Management Recruiters has the option to deem it an immediate default under the Franchise Agreement. If this occurs, Management Recruiters is entitled to take possession of the office and assume all rights, title, and interest in the lease. This assignment creates a lien on the franchisee's interest in the lease until all debts to Management Recruiters are satisfied. However, Management Recruiters' right to assume obligations under the lease is optional and at their sole discretion.