What is the 'Franchise Agreement' defined as in the Collateral Assignment of Lease for a Mrcool franchise?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
Assignee has the right and possesses full power and authority to take possession of the Leased Premises, to eject and expel Assignor from possession and occupancy of the Leased Premises and to terminate Assignor's right, title and interest in and to the Lease in the event of: (a) a default by Assignor under the terms of the Lease and Assignor's failure to timely cure such default, assuming that such default is capable of curing; (b) a default by Assignor (in Assignor's capacity as a MRCOOL Center franchisee) under the terms and conditions of the MRCOOL Center Franchise Agreement between Assignor, as franchisee, and Assignee, as franchisor (the "Franchise Agreement"), and Assignor's failure to timely cure such default, assuming that such default is capable of curing; (c) upon default of any agreement supporting or guaranteeing the Franchise Agreement; or (d) the expiration or termination of the Franchise Agreement.
Assignor agrees that Assignor will not and shall not permit, grant or suffer any termination, surrender or modification of the Lease without the prior written consent of Assignee. Throughout the term of the Franchise Agreement, Assignor shall elect and exercise all options to extend the terms of or renew the Lease
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, the "Franchise Agreement" in the context of the Collateral Assignment of Lease is defined as the agreement between the franchisee (referred to as Assignor in this context) and Mrcool (referred to as Assignee in this context). This agreement outlines the terms and conditions under which the franchisee operates their Mrcool Center.
The Collateral Assignment of Lease grants Mrcool certain rights related to the leased premises of the Mrcool Center. Specifically, Mrcool has the power to take possession of the leased premises and terminate the franchisee's rights to the lease if the franchisee defaults under the terms of the Franchise Agreement and fails to cure the default, assuming the default is curable. This is a significant protection for Mrcool, ensuring they can maintain control over the location of the franchise in case of operational or financial issues with the franchisee.
This clause is triggered not only by defaults in the lease itself but also by defaults in any agreement supporting or guaranteeing the Franchise Agreement, or upon the expiration or termination of the Franchise Agreement. This broadens Mrcool's protection, linking the lease to the overall health and adherence to the franchise terms. The franchisee is also prohibited from terminating, surrendering, or modifying the lease without Mrcool's prior written consent, further solidifying Mrcool's control over the leased location throughout the franchise term.