The conditional assignment of lease is very likely the most important document in the signing through opening process, if you have real estate. A franchisee has agreed in advance, by signing the franchise agreement, that they will get their landlord to sign a document that says if they don’t pay the rent, the landlord will notify you. If you choose, you can cure the fault, and before they get evicted, step into their shoes through the default and become the tenant. At a minimum, commonly in franchise agreements, non-payment of rent is considered a default of the agreement and you as the franchisor should then send the franchisee a notice of violation.

A conditional assignment of lease can also be used as a brand defense strategy. In this case the franchisee says, “I don’t want to be part of your brand anymore. I don’t want to be ‘Joe’s Place’. I want to be ‘Tom’s place’.” Having that piece of paper allows you to exercise the right to kick the franchisee out of the retail location, so you can go in and over control. And if you terminate the franchisee and default them, you can then take over the lease and territory.