My latest video focuses on several factors that create additional intricacies for a landlord in leasing to a franchisee. Most franchisors will require that the landlord enter into a franchisor generated addendum, with typical provisions addressing default notices, cure rights, right of entry after default or termination, use and restrictive covenant issues, assignment and recapture provisions, and the ability to mortgage property equipment, among others. In addition, the landlord should ask to see a copy of the fully executed franchise agreement in order to verify that the term of the agreement is longer than the term of the lease. Another critical element is determining what defaults and termination rights may exist under the franchise agreement. All of these may influence what the landlord is willing to do in its lease, and what it is willing to negotiate.
Click below to watch my brief video to learn more about these and other unique aspects of leasing to franchisees, and scroll down to read my article on the topic posted on Nov. 14, 2011.