Under what condition does Southern Steer have the right to enforce the provisions of the lease assignment?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
- 26.2. Perfected Assignment; Notice. This assignment will constitute a perfected, absolute and present assignment; provided, however, the Franchisor will have no right under this assignment to enforce the provisions of the Lease until an Event of Default has occurred. After an Event of Default has occurred, the Franchisor will have the right, but not the obligation, to enforce the provisions of this assignment and to take possession of the Franchised Location by giving the Franchisee and the Landlord written notice that it has affirmatively exercised its rights under this assignment. The written notice will state:
- (a) that the Franchisor is taking and assuming the Lease from the Franchisee;
- (b) the date on which the Franchisor will take physical possession of the Franchised Location; and
- (c) that the Franchisor agrees to be bound by the terms and conditions of the Lease being assumed for the remaining term of the Lease.
The Franchisor will execute the appropriate documents at the time it gives written notice to the Franchisee and the Landlord of its assumption of the Lease.
- 26.3. No Prior Assignment; Estoppel. The Franchisee represents and warrants that:
- (a) there has been no prior assignment of the Lease to a third party;
- (b) it has the right to assign the Lease to the Franchisor;
- (c) the Lease is a valid and enforceable agreement,
- (d) neither the Landlord nor the Franchisee is in default to the other thereunder; and (e) all covenants, conditions and agreements have been performed as required by the Lease.
Source: Item 22 — ITEM. 22 CONTRACTS (FDD pages 61–168)
What This Means (2025 FDD)
According to Southern Steer's 2025 Franchise Disclosure Document, Southern Steer has the right to enforce the provisions of the lease assignment if an Event of Default has occurred. This assignment is considered a perfected, absolute, and present assignment.
The FDD specifies that after an Event of Default, Southern Steer has the right, but not the obligation, to enforce the provisions of the assignment and take possession of the Franchised Location. To do so, Southern Steer must provide written notice to both the franchisee and the landlord. This notice must state that Southern Steer is taking and assuming the lease from the franchisee, the date on which Southern Steer will take physical possession of the location, and that Southern Steer agrees to be bound by the terms and conditions of the lease for its remaining term.
Southern Steer will also execute the appropriate documents when providing written notice to the franchisee and landlord of its assumption of the lease. The franchisee confirms that there has been no prior assignment of the lease, that they have the right to assign the lease to Southern Steer, that the lease is valid and enforceable, that neither party is in default, and that all required covenants, conditions, and agreements have been performed.