What is the purpose of the Collateral Assignment of Lease that a Southern Steer franchisee must execute?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Amendments. No amendment or variation of the terms of the Lease or this Addendum to the Lease will be valid unless made in writing and signed by the parties hereto.
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- Reaffirmation of Lease. Except as amended or modified herein, all of the terms, conditions and covenants of the Lease will remain in full force and effect and are incorporated herein by reference and made a part of this Agreement as though copies herein in full.
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- Beneficiary. Lessor and Lessee expressly agree that Franchisor is a third-party beneficiary of this Lease and this Addendum.
IN TESTIMONY WHEREOF, witness the signatures of the parties hereto as of the day, month and year first written above.
| LESSOR: | LESSEE: |
|---|---|
| By: | By: |
| Title: | Title: |
ATTACHMENT G-1 TO FRANCHISE AGREEMENT
COLLATERAL ASSIGNMENT OF LEASE
| FOR VALUE RECEIVED, as of | ("Effective Date"), the undersigned, |
|---|---|
| ("Assignor"), hereby assigns, transfers and sets over unto | |
| Southern Steer Franchising International, LLC | ("Assignee") all of Assignor's right, title and interest as |
| Lessee, in, to and under that certain lease, | with respect to the premises located at |
| ("Premises"). This Collateral Assignment of Lease ("Assignment") | is for |
| collateral purposes only and except as specified herein, Assignee will | have no liability or obligation of any |
| kind whatsoever arising from or in connection with this Assignment unless Assignee will | take possession |
| of the Premises demised by the Lease pursuant to the terms hereof and will | assume the obligations of |
| Assignor thereunder. |
Assignor represents and warrants to Assignee that it has full power and authority to so assign the Lease and its interest therein and that Assignor has not previously, and is not obligated to, assign or transfer any of its interest in the Lease or the Premises demised thereby.
Upon a default by Assignor under the Lease or under that certain franchise agreement ("Franchise Agreement") for a Southern Steer Business between Assignee and Assignor, or in the event of a default by Assignor under any document or instrument securing the Franchise Agreement, Assignee will have the right and is hereby empowered to take possession of the Premises demised by the Lease, expel Assignor therefrom, and, in that event, Assignor will have no further right, title or interest in the Lease.
Assignor agrees it will not suffer or permit any surrender, termination, amendment or modification of the Lease without the prior written consent of Assignee. Through the Initial Term of the Franchise Agreement and any Successor Terms thereof, Assignor agrees that it will elect and exercise all options to extend the term of or renew the Lease not less than thirty (30) days before the last day that said option must be exercised, unless Assignee otherwise agrees or instructs in writing. Upon failure of Assignee to otherwise agree in writing, and upon failure of Assignor to so elect to extend or renew the Lease as stated herein, Assignor hereby irrevocably appoints Assignee as its true and lawful attorney-in-fact, which appointment is coupled with an interest, to exercise the extension or renewal options in the name, place and stead of Assignor for the sole purpose of effecting the extension or renewal.
[Signatures on following page] IN WITNESS WHEREOF, Assignor and Assignee have signed this Collateral Assignment of Lease as of the Effective Date first above written.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, a franchisee must execute a Collateral Assignment of Lease, which assigns the franchisee's rights in the lease to Southern Steer in the event of a termination or expiration of the franchise agreement, or a default under the lease. This assignment serves as collateral, giving Southern Steer a security interest in the lease to protect their interests.
Specifically, the franchisee assigns all rights, title, and interest in the lease to Southern Steer as security for the franchisee's performance under the franchise agreement. If an Event of Default occurs, Southern Steer has the option to take over the lease for the remaining term, under the same terms and conditions, including rental costs, as originally agreed upon by the franchisee. Southern Steer can file a UCC-1 Financing Statement to record their security interest in the lease.
An Event of Default includes scenarios such as the termination of the franchise agreement by either party, the franchisee wrongfully terminating the agreement, the franchisee ceasing business at the franchised location, the agreement expiring without a successor agreement, or the lease being terminated by either the landlord or the franchisee. However, Southern Steer is not obligated to assume the lease and bears no responsibility for the franchisee's past-due obligations under the lease.
Furthermore, the franchisee cannot surrender, terminate, amend, or modify the lease without Southern Steer's written consent. The franchisee must also elect to extend or renew the lease at least 30 days before the option expires, unless Southern Steer instructs otherwise. If the franchisee fails to do so, Southern Steer is irrevocably appointed as the attorney-in-fact to exercise the extension or renewal options on behalf of the franchisee.