Many franchisors are involved with leases (mainly retail leases)
in some way, shape or form. Some franchisors choose to be the
tenant under the lease, and then subsequently licence the premises
to the franchisee, while some franchisors are happy for the
franchisee to be the tenant under the lease, as their liability is
limited if the franchisee's lease is terminated. There are
positives and negatives for both sides, and set out below is a list
of these considerations to take into account.
If the franchisor is the lessee (and subsequently
licenses the property to the franchisee)
- If the franchisee defaults and is subsequently ejected from the
premises, then the franchisor remains liable to the landlord for
the remainder of the term of the lease. The upshot of this scenario
is that you retain control of the premises, and you can then decide
whether to seek a new franchisee, who will hopefully be more
successful, or you can operate out of the premises yourself;
