So, they sign a 15-year lease but are only on the hook for the first year? How does that work? Sounds more like a year lease with an option to extend?
So basically if the location turns out to be unprofitable, the subsidiary goes out of business or goes bankrupt and WeWork isn't stuck with the lease.
From the landlord's perspective, yes it is basically equivalent to a year lease with option to extend... not totally clear why the landlord would agree to that.
In this specific case a large sophisticated organization may be exploiting an unsophisticated organization, but really this is standard operating procedure for any franchise.
You can never involuntarily inherit debt in the US. You have to be a co-signer to begin with.
There is nothing preventing you from doing this as an individual as well. The hard part isn’t the subsidiary or LLC, it’s getting the counter party to enter into an agreement with an entity containing no assets or long term viability.
I mean by that theory I could open up 100s of Restaurant and close each of them that is not performing?
Landlords are likely agreeing to this only because Wework would never be able to sign a lease with any owner if they defaulted on a location.
They aren't, so they are.
Your comment seems to imply that the landowner has no choice.
If the landlord could find a better tenant, WeWork would have zero chance to rent any of it.