Under what circumstances related to transfer fees are they collectable by Monicals Pizza?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Landlord agrees that MONICAL PIZZA CORPORATION, or a Franchisee of MONICAL PIZZA CORPORATION selected by MONICAL PIZZA CORPORATION, shall have the right to receive an assignment of this Lease upon the transfer, termination or expiration of the Franchise Agreement between MONICAL PIZZA CORPORATION and Tenant.
Upon such transfer, termination or expiration of said Franchise Agreement, Landlord shall promptly execute an acknowledgment of and consent to the assignment of the Lease.
Any such assignment shall be acknowledged without payment of any assignment fee or similar charge and without a requirement for the payment of an additional security deposit or any increase in rent or other fees.
Landlord agrees that, before the effective date of any assignment of the lease to MONICAL PIZZA CORPORATION or its designee, Tenant shall be solely responsible for all obligations, debts and payments under the lease.
Tenant shall not be entitled to a return of its security deposit;
Source: Item 23 — RECEIPTS (FDD pages 46–257)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, a landlord cannot charge an assignment fee when the lease is assigned to Monicals Pizza Corporation or a franchisee selected by them. This protects Monicals Pizza and its franchisees from unexpected costs when a franchise changes hands or if Monicals Pizza needs to take over a lease.
This clause ensures that landlords acknowledge and consent to the assignment of the lease without imposing extra financial burdens. Specifically, the landlord cannot demand any assignment fee or similar charge, require an additional security deposit, or increase the rent or other fees as a condition of the lease assignment. This provision aims to streamline the transfer process and prevent landlords from exploiting the situation for financial gain.
However, the tenant (the franchisee) is not entitled to a return of their security deposit in the event of such a transfer. This means that while Monicals Pizza or its designee can assume the lease without added costs, the outgoing franchisee forfeits their security deposit, which could have implications for the franchisee's financial planning during a transfer or termination scenario.