Under what conditions will Nothing Bundt Cakes require a collateral assignment of lease?

According to Nothing Bundt Cakes's 2025 Franchise Disclosure Document, Nothing Bundt Cakes requires a collateral assignment of lease as a condition of approving a franchisee's lease. This assignment ensures that if the franchisee breaches the lease agreement or if the Franchise Agreement is terminated or expires, the landlord grants Nothing Bundt Cakes the right to assume the franchisee's rights and obligations under the lease. The lease term must be, at a minimum, for the initial term of the Franchise Agreement.

In practical terms, this means that before a prospective Nothing Bundt Cakes franchisee can finalize a lease for their bakery location, Nothing Bundt Cakes must approve the location and the lease terms. As part of this approval process, both the franchisee and the landlord must sign a collateral assignment of lease. This document gives Nothing Bundt Cakes the power to step into the franchisee's shoes as the tenant if the franchisee defaults on the lease or if the franchise relationship ends.

This requirement protects Nothing Bundt Cakes by ensuring that it can maintain control over the bakery location, even if the franchisee is no longer operating the business. It also ensures the location continues to operate as a Nothing Bundt Cakes, maintaining brand consistency. This is a fairly standard practice in franchising, as it allows the franchisor to protect its brand and maintain a consistent presence in the market. If a franchisee fails, Nothing Bundt Cakes can take over the lease and either operate the location itself or transfer it to a new franchisee.