Can the franchisee assign the lease to a third party while the assignment to Southern Steer is in effect?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. Lessor acknowledges that Lessee intends to operate a Southern Steer Business franchise from the leased Premises pursuant to a Franchise Agreement ("Franchise Agreement") with Southern Steer Franchising International, LLC ("Franchisor") under the name "Southern Steer Butcher" or other name designated by Franchisor (herein referred to as "Franchised Southern Steer Business").
- C. The parties now desire to amend the Lease in accordance with the terms and conditions contained herein.
NOW, THEREFORE, it is hereby mutually covenanted and agreed between Lessor and Lessee as follows:
Remodeling and Decor.
Lessor agrees that Lessee will have the right to remodel, equip, paint and decorate the interior of the Premises and to display the proprietary marks and signs on the interior and exterior of the Premises as Lessee is reasonably required to do pursuant to the Franchise Agreement and any successor Franchise Agreement under which Lessee may operate a Franchised Southern Steer Business on the Premises.
Assignment or Subletting.
Lessee will agree to attorn to any assignee of Lessor provided such assignee will agree not to disturb Lessee's possession of Premises.
Lessee will have the right to assign or sublet all of its right, title and interest in the Lease, at any time during the term of the Lease, including any extensions or renewals thereof, without charge and without first obtaining Lessor's consent in accordance with the Collateral Assignment of Lease attached hereto as Attachment G-1: (a) to Franchisor or Franchisor's parent, subsidiary, or affiliate, (b) to a duly authorized franchisee of Franchisor, (c) in connection with a merger, acquisition, reorganization or consolidation, or (d) in connection with the sale of Lessee's corporate stock or assets.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, a franchisee (referred to as Lessee in the lease context) has the right to assign or sublet their interest in the lease under specific conditions, even with the Collateral Assignment of Lease in place.
Specifically, the franchisee can assign or sublet the lease without charge and without needing the lessor's consent if the assignment is to: Southern Steer Franchising International, LLC (the Franchisor) or its parent, subsidiary, or affiliate; a duly authorized Southern Steer franchisee; in connection with a merger, acquisition, reorganization, or consolidation; or in connection with the sale of the franchisee's corporate stock or assets. This provides the franchisee with flexibility in certain business scenarios, such as selling the business or restructuring, without being unduly restricted by the lease agreement.
This clause is included in the lease to facilitate the smooth transfer of the Southern Steer business in various situations, ensuring that the franchise can continue operating under new ownership or management without lease-related obstacles. However, any other assignment or subletting would likely require the lessor's consent, as is typical in commercial lease agreements. It is important for a prospective franchisee to fully understand the terms of the lease and the conditions under which assignment or subletting is permitted.