Franchisee Default Notification - help needed

[Courtney Duong]

We manage a commercial property (retail, multi-tenant) and had a fitness tenant (a franchisee) who went dark late 2019 so we terminated the lease (they still owe us 3 months of rent).  Given that our property manager was a newbie he did not notify the Franchisor of this termination.  I just happen to look at the lease now and see that we were supposed to notify Franchisor of anything that happened.  

Here is what it says in the lease:

FRANCHISEE DEFAULT NOTIFICATION.  Landlord agrees to furnish XXXX, Inc. ("Franchisor") with copies and all letters and notices to Tenant pertaining to the Lease and the Premises at the same time that such letters and notices are sent to Tenant addressed to XXXX at YYYY Attention: Real Estate Compliance & Notification Department.  Landlord further agrees that, if it intends to terminate the Lease, the Landlord will give Franchisor the same advance written notice of such intent as provided to Tenant, specifying in such notice all defaults that are the cause of the proposed termination.  Franchisor shall have the right to cure, at its sole options, any such default within the time periods granted to Tenant under the Lease.  If nether Tenant or Franchisor cures all such defaults within said time periods (or such longer cure periods as maybe specifically permitted by the Lease), then the Landlord may terminate the Lease, re-enter the Premises and/or exercise all other rights as set forth in the Lease.  Prior to the expiration or termination of the Lease, Franchisor shall have the right to enter Premises to make any reasonable modifications or any reasonable alterations necessary to protect Franchisor interest in the Franchisor business and the Proprietary Marks and System (as such terms are defined in the Franchise Agreement), or to cure any default under the Franchise Agreement or any development agreement entered into by Franchisor and the Tenant or under the Lease, and Landlord and Tenant agree that Franchisor shall not be liable for trespass or any other crimes or tort. 

This unit is still vacant as of now and yesterday we had someone reached out to us expressing interest in leasing it.  Before getting into that I want to take care of the formality with this Franchisor the correct way so everything will be clean and clear.  Given that we already terminated the Lease with franchisee without giving any notices to Franchisor what are our options now?  Be honest and send notification to Franchisor saying we already terminated the Lease with franchisee already?  Or pretend nothing happened yet and tell them now that we intend to terminate the lease with franchisee?  Is this something simple enough that we can take care of ourselves by communicating correctly with Franchisor?  Or should we consult with an attorney?

Any input/advice is greatly appreciated.

Thanks.

[Ronald Rohde]

Originally posted by @Courtney Duong:

@Ronald Rohde have you dealt with something like this before?  Thanks.  

 Yes, I have. You have to reach out to them ASAP. If its a popular franchise, they can step into the shoes of the franchisor and revive everything and keep the space as current. You need to review all default notices and formulate a gameplan of what you WANT vs what the franchisor wants (once you know). Then you can decide next steps.