Azal_Coffee 2024 Franchise FAQ - FDD Ninja

Question 1

What conditions must be met before Azal Coffee will consent to a proposed transfer?

Accepted Answer

- (i) You or the proposed transferee must take any action specified by us to make the Franchise Business comply with current appearance, Franchise Trade Dress, equipment, and signage requirements. We may require this action to be taken before the Transfer or within a specified period of time after the Transfer.
- (j) The proposed transferee and its owners, shareholders, officers, directors, partners, members, investors, employees and agents, and their Family Members and affiliates of the proposed transferee must not be an owner, shareholder, officer, director, partner, member, investor, employee, agent or consultant of or to a business that competes with Azal Coffee. On our request, the transferee may be required to sign an acknowledgement of compliance with this prohibition.
- (k) If the transfer involves installment payments by the transferee to the Seller, the Seller must sign a subordination agreement under which the Seller subordinates its right to receive any installment from the transferee to our right to receive all amounts due to us through the due date of the installment. The subordination agreement must be in a format and contain terms and conditions specified by us.
- (I) Your landlord must allow the lease for the Franchise Location to be transferred to the transferee.
- (m) You, the Seller, and the proposed transferee must comply with any other standard procedures specified by us.

You acknowledge that the conditions listed above are necessary for protection of the Franchise Marks and Franchise Systems and do not impose unreasonable restrictions on a Transfer.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 2

What is the estimated total initial investment range to open an Azal Coffee franchise?

Accepted Answer

NITIAL INVESTMENT

| Type of Expenditure                                                     | Amount                    | Method of Payment | When Due                                 | To Whom Payment Is To Be Made                                            |
|-------------------------------------------------------------------------|---------------------------|----------------------|------------------------------------------|--------------------------------------------------------------------------------|
| Initial Franchise Fee | \$25,000 (1) | Lump sum | On signing the Franchise Agreement | Us |
| Lease Review | \$0.00 to \$1,500 | As incurred | Before opening as incurred | Us |
| Fee |  |  |  |  |
| Grand Opening Advertising (2) | \$3,000 to \$6,000 | As incurred | As incurred | Advertising Providers |
| Initial Lease | \$9,000 to \$20,000 | As agreed | As specified in lease | Landlord |
| Payments (3) |  |  |  |  |
| Leasehold | \$120,000 to | As agreed | Before opening as incurred | Contractors and Suppliers |
| Improvements (4) | \$190,000 |  |  |  |
| Equipment, Fixtures, and Furniture (5) | \$50,000 to \$70,000 | As agreed | Before opening as incurred | Suppliers |
| Computer | \$4,000 to \$6,000 | As incurred | Before opening as incurred | Us and Suppliers |
| Technology and |  |  |  |  |
| POS System |  |  |  |  |
| Signage | \$5,000 to \$10,000 | As agreed | Before opening as incurred | Suppliers |
| (Indoor/Outdoor) |  |  |  |  |
| Initial Inventory and Operating Supplies | \$25,000 to \$35,000 | As agreed | Before opening as incurred | Our affiliate and Suppliers |
| Miscellaneous | \$2,000 to \$4,000 | As agreed | Before opening as incurred | Third Parties |
| Travel and Living |  |  |  |  |
| Expenses while |  |  |  |  |
| Training (7) |  |  |  |  |
| Insurance (8) | \$2,500 to \$5,000 | As agreed | Before opening as incurred | Insurance Companies |
| Professional Services, Business Licenses and Miscellaneous Expenses (9) | \$5,000 to \$7,500 | As agreed | Before opening as incurred | Professionals, Governmental Organizations, and other Third Parties |
| Additional Funds (three months) | \$20,000 to \$40,000 | As incurred | As incurred | Us, our affiliates, Suppliers and Employees |
| TOTALS(11) | \$270,500 t

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 19–22)

Question 3

What are the requirements for the Azal Coffee franchisee to be considered 'ready to open'?

Accepted Answer

At least 30 days in advance of the projected opening date for your Franchise Business, you must request that we perform our final inspection. Your Franchise Business must be ready to open prior to the commencement of any on-site training and the final inspection. "Ready to open" means that you have obtained all necessary permits, licenses and inspections, all equipment necessary to operate the Franchise Business must be operational, product is available for sale, adequate staff has been employed, and you or a trained manager is present at the Franchise Location. Our representative will not provide training or remain on-site if you or a trained manager is not present at the Franchise Location. We will not book travel for the on-site training and final inspection until you notify us that you are ready to open. We will go through a ready to open checklist a day or two before the representative is scheduled to travel. If you are not ready to open, we will have to reschedule the representative's travel and you will have to pay the expense of rescheduling, which may include cancellation fees. If it appears you are ready to open, but the Franchise Business is not ready to open when the representative arrives for training and/or final inspection, you must pay all travel and living expenses incurred by us or our agents and the wages of our employees or independent contractors or agents in connection with provision of the on-site training and inspection. If we interrupt on-site training and inspection because your Franchise Business is not ready to open, we will provide on-site training and a final inspection only after payment of the above listed expenses and certification by you that your Franchise Business is ready to open.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–36)

Question 4

For Azal Coffee, in which states is the Agent for Service of Process listed as 'Same' as the State Administrator?

Accepted Answer

| STATE           | STATE ADMINISTRATOR                                                                                                                                                                         | AGENT FOR SERVICE OF PROCESS                                                                                               |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------|
| INDIANA | Indiana Secretary of State Securities Division 302 West Washington Street Room E-111 Indianapolis, IN 46204 (317) 232-6681 | Same |
| MARYLAND | Office of Attorney General Securities Division 200 St. Paul Place Baltimore, Maryland 21202 (410) 576-7042 | Same |
| MINNESOTA | Commissioner Minnesota Department of Commerce 85 7th Place East, Suite 280 St. Paul, Minnesota 55101-2198 (651) 539-1600 | Same |

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 5

What subjects are covered in the Azal Coffee training program?

Accepted Answer

| Subject                                      | Hours of Classroom Training | Hours of On-the Job Training | Location                                                             |
|----------------------------------------------|-----------------------------------|---------------------------------|----------------------------------------------------------------------|
| Azal Coffee History and Menu Basics | 1 hours                           | 1 hours                         | Dearborn, Michigan or other location to be determined by us.   |
| Coffee and Menu Preparation               | 8 hours                           | 20 hours                     | Dearborn, Michigan or other location to be determined by us |
| Permits, POS Systems, Safety Protocol     | 2 hours                           | 2 hours                         | Dearborn, Michigan or other location to be determined by us |

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–36)

Question 6

What is the total number of on-the-job training hours provided by Azal Coffee?

Accepted Answer

estimate.

## **TRAINING PROGRAM**

| Subject                                      | Hours of Classroom Training | Hours of On-the Job Training | Location                                                             |
|----------------------------------------------|-----------------------------------|---------------------------------|----------------------------------------------------------------------|
| Azal Coffee History and Menu Basics | 1 hours                           | 1 hours                         | Dearborn, Michigan or other location to be determined by us.   |
| Coffee and Menu Preparation               | 8 hours                           | 20 hours                     | Dearborn, Michigan or other location to be determined by us |
| Permits, POS Systems, Safety Protocol     | 2 hours                           | 2 hours                         | Dearborn, Michigan or other location to be determined by us |

![](_page_34_Picture_0.jpeg)

| Subject                                                            | Hours of Classroom Training | Hours of On-the Job Training | Location                                                             |
|--------------------------------------------------------------------|-----------------------------------|---------------------------------|----------------------------------------------------------------------|
| Opening and Closing the Store | 2 hours | 2 hours | Dearborn, Michigan or other location to be determined by us |
| Food Preparation, | 3 hours | 4 hours | Dearborn, Michigan or |
| Handling, Labeling, |  |  | other location to be |
| Storage, and Inventory |  |  | determined by us |
| Customer Service and Marketing | 2 hours | 4 hours | Dearborn, Michigan or other location to be determined by us |
| Beverage Trials and Testing | 2 hours | 3 hours | Dearborn, Michigan or other location to be determined by us |
| TOTALS | 20 hours | 36 hours |  |
In addition, and immediately prior to your Store opening, we will provide a representative for up to 2 days prior to th

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–36)

Question 7

What was the total number of Azal Coffee outlets that ceased operations for reasons other than termination or non-renewal across all locations in 2021?

Accepted Answer

| State    | Year | Outlets at Start of Year | Outlets Opened | Outlets Reacquired from Franchisee | Outlets Closed | Outlets Sold to Franchisee | Outlets at End of the Year |
|----------|------|--------------------------------|-------------------|---------------------------------------------|-------------------|----------------------------------|----------------------------------|
| Michigan | 2021 | 0                              | 0                 | 0                                           | 0                 | 0                                | 0                                |
|          | 2022 | 0                              | 0                 | 0                                           | 0                 | 0                                | 0                                |
|          | 2023 | 0                              | 0                 | 0                                           | 0                 | 0                                | 0                                |
| Total    | 2021 | 0                              | 0                 | 0                                           | 0                 | 0                                | 0                                |
|          | 2022 | 0                              | 0                 | 0                                           | 0                 | 0                                | 0                                |
|          | 2023 | 0                              | 1                 | 0                                           | 0                 | 0                                | 1                                |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 48–50)

Question 8

What was the total number of Azal Coffee outlets at the start of 2022 across all locations?

Accepted Answer

| Outlet Type   | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---------------|------|----------------------------------------|--------------------------------------|------------|
| Franchised    | 2021 | 0                                      | 0                                    | 0          |
|               | 2022 | 0                                      | 0                                    | 0          |
|               | 2023 | 0                                      | 0                                    | 0          |
| Company       | 2021 | 0                                      | 0                                    | 0          |
| Owned         | 2022 | 0                                      | 0                                    | 0          |
|               | 2023 | 0                                      | 1                                    | 1          |
| Total Outlets | 2021 | 0                                      | 0                                    | 0          |
|               | 2022 | 0                                      | 0                                    | 0          |
|               | 2023 | 0                                      | 1                                    | 1          |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 48–50)

Question 9

What is the trend in the number of company-owned Azal Coffee outlets from 2021 to 2023?

Accepted Answer

[Item 20: OUTLETS AND FRANCHISEE INFORMATION]

**Table No. 4 Status of Company-Owned Outlets For Years 2021 to 2023**

---

| Outlet Type   | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---------------|------|----------------------------------------|--------------------------------------|------------|
| Franchised    | 2021 | 0                                      | 0                                    | 0          |
|               | 2022 | 0                                      | 0                                    | 0          |
|               | 2023 | 0                                      | 0                                    | 0          |
| Company       | 2021 | 0                                      | 0                                    | 0          |
| Owned         | 2022 | 0                                      | 0                                    | 0          |
|               | 2023 | 0                                      | 1                                    | 1          |
| Total Outlets | 2021 | 0                                      | 0                                    | 0          |
|               | 2022 | 0                                      | 0                                    | 0          |
|               | 2023 | 0                                      | 1                                    | 1          |

---

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 48–50)

Question 10

What is the trend in the number of franchised Azal Coffee outlets from 2021 to 2023?

Accepted Answer

| Outlet Type   | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---------------|------|----------------------------------------|--------------------------------------|------------|
| Franchised    | 2021 | 0                                      | 0                                    | 0          |
|               | 2022 | 0                                      | 0                                    | 0          |
|               | 2023 | 0                                      | 0                                    | 0          |
| Company       | 2021 | 0                                      | 0                                    | 0          |
| Owned         | 2022 | 0                                      | 0                                    | 0          |
|               | 2023 | 0                                      | 1                                    | 1          |
| Total Outlets | 2021 | 0                                      | 0                                    | 0          |
|               | 2022 | 0                                      | 0                                    | 0          |
|               | 2023 | 0                                      | 1                                    | 1          |

Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 48–50)

Question 11

Under what conditions will Azal Coffee approve a franchise transfer?

Accepted Answer

| Provision                                                                              | Section in Agreement                                   | Summary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|----------------------------------------------------------------------------------------|-----------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | franchise. Sublicensing of your rights is not a permitted transfer. |
| l. Our approval of a transfer by you | Sections 14.2 and 14.3 of Franchise Agreement | You must have our written consent to transfer your franchise. We will not unreasonably withhold consent to a permitted transfer. |
| m. Conditions for our approval of the transfer | Section 14.3 of Franchise Agreement | The proposed transferee meets the conditions we have set for any new franchisee; we find the terms of the proposed transfer to be reasonable , you must be in compliance with all obligations to us and must pay us and all suppliers all monies owing; release signed by you; the new franchisee completes training; the new franchisee signs, at our option, a new Franchise Agreement on the standard form in use by us at the time of the transfer or an assumption of the existing Franchise Agreement; transfer fee paid; you or the proposed transferee must take action specified by us to comply with current appearance, equipment, and signage requirements; proposed transferee and affiliates are not in competition with a Azal Coffee; subordination agreement signed by you (if installment payments required); landlord permits assignment of lease; and you and the proposed transferee comply with other standard procedures specified by us. |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–47)

Question 12

What are all the fees that an Azal Coffee franchisee might have to pay, considering both the initial fees (Item 5) and other fees (Item 6)?

Accepted Answer

[Item 5: INITIAL FEES]

You must pay an initial franchise fee of $25,000 for an Azal Coffee franchise. The initial franchise fee is payable in full at the time you sign the Franchise Agreement.

All initial franchise fees are earned at the time of payment and are not refundable under any circumstances. Initial franchise fees are uniform. It is our intent to charge all new franchisees the same initial franchise fee.

You must also pay our affiliate, Wholesale $70,000 to $80,000 for your initial supply of coffee beans, tea, coffee and tea mixes, equipment, paper products, syrups, sauces, milk, cups, mugs, branded products, coffee supplies, bakery goods, uniforms, and other inventory items. This range also includes the estimated cost to ship the goods to your Franchise Location. You must pay this fee before you open and immediately upon invoice. This payment is not refundable.

As part of our lease approval process, we may have an attorney review the proposed lease to ensure that the proposed lease meets our requirements. We will have a right to charge you a non-refundable fee up to $1,500 to cover the cost of that review. You must pay this fee within 7 days of demand. This payment is not refundable.

If we require you to complete additional training, in addition to all other expenses you may incur for travel, labor, lodging, meals, etc., you will pay us to conduct such additional training at a rate of $250 per person per day.

We, our affiliates, or a supplier approved by us may charge additional monthly fees related to the POS Systems and other software and technology we require you to use. You will pay these amounts to us or one of our affiliates, who will then distribute those funds as appropriate, including to applicable third-party vendors.

A Designated Owner (or, if specified by us, the General Manager or other management employees) must, solely at your expense, attend additional training, sales programs, and meetings reasonably specified by us, including regular periodic franchise meetings if specified by us. We may require you to pay a reasonable charge for any training provided to you and/or your managers beyond the initial training program described in Section 7.1. Any fees we charge will be uniform as to all persons attending additional training at that time. We may require that you complete additional training before offering new Authorized Products from the Franchise Business.

Your payments to us for royalty, local advertising fees, marketing fund contributions, mobile application and technology fees, training, renewal and transfer fees, management fees, mystery shopper fees, relocation fees, litigation expenses, late charges and interest, amounts owed for products or services provided by us or our affiliates, amounts owed for maintenance expenses we incur under Section 8.8, amounts owed for management fees, amounts owed for liquidated damage amounts, and all other amounts you owe to us or our affiliates must be made by electronic or similar funds transfer in the appropriate amounts from your bank account to our accounts, and at the places or in the manner we may specify.

Question 13

Does the Azal Coffee franchise agreement addendum for Hawaii add any new obligations for the franchisor related to supporting franchises in Hawaii?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 14

Does the Azal Coffee franchise agreement addendum for Hawaii alter any financial reporting requirements for the franchisee?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 15

Does the Azal Coffee franchise agreement addendum for Hawaii change any obligations of the franchisee?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 16

Does the Azal Coffee franchise agreement addendum for Hawaii change the royalty fee structure for franchises located in Hawaii?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 17

Does the Azal Coffee franchise agreement addendum for Hawaii expand the geographic territory granted to the franchisee?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 18

Does the Azal Coffee franchise agreement addendum for Hawaii modify the dispute resolution process for franchises located in Hawaii?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 19

Does the Azal Coffee franchise agreement addendum for Hawaii modify any of the fees outlined in the original franchise agreement?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 20

How does the initial franchise fee for Azal Coffee in Item 5 compare to the estimated initial investment range in Item 7?

Accepted Answer

NITIAL INVESTMENT

| Type of Expenditure                                                     | Amount                    | Method of Payment | When Due                                 | To Whom Payment Is To Be Made                                            |
|-------------------------------------------------------------------------|---------------------------|----------------------|------------------------------------------|--------------------------------------------------------------------------------|
| Initial Franchise Fee | \$25,000 (1) | Lump sum | On signing the Franchise Agreement | Us |
| Lease Review | \$0.00 to \$1,500 | As incurred | Before opening as incurred | Us |
| Fee |  |  |  |  |
| Grand Opening Advertising (2) | \$3,000 to \$6,000 | As incurred | As incurred | Advertising Providers |
| Initial Lease | \$9,000 to \$20,000 | As agreed | As specified in lease | Landlord |
| Payments (3) |  |  |  |  |
| Leasehold | \$120,000 to | As agreed | Before opening as incurred | Contractors and Suppliers |
| Improvements (4) | \$190,000 |  |  |  |
| Equipment, Fixtures, and Furniture (5) | \$50,000 to \$70,000 | As agreed | Before opening as incurred | Suppliers |
| Computer | \$4,000 to \$6,000 | As incurred | Before opening as incurred | Us and Suppliers |
| Technology and |  |  |  |  |
| POS System |  |  |  |  |
| Signage | \$5,000 to \$10,000 | As agreed | Before opening as incurred | Suppliers |
| (Indoor/Outdoor) |  |  |  |  |
| Initial Inventory and Operating Supplies | \$25,000 to \$35,000 | As agreed | Before opening as incurred | Our affiliate and Suppliers |
| Miscellaneous | \$2,000 to \$4,000 | As agreed | Before opening as incurred | Third Parties |
| Travel and Living |  |  |  |  |
| Expenses while |  |  |  |  |
| Training (7) |  |  |  |  |
| Insurance (8) | \$2,500 to \$5,000 | As agreed | Before opening as incurred | Insurance Companies |
| Professional Services, Business Licenses and Miscellaneous Expenses (9) | \$5,000 to \$7,500 | As agreed | Before opening as incurred | Professionals, Governmental Organizations, and other Third Parties |
| Additional Funds (three months) | \$20,000 to \$40,000 | As incurred | As incurred | Us, our affiliates, Suppliers and Employees |
| TOTALS(11) | \$270,500 t

Question 21

How does the Azal Coffee initial franchise fee (Item 5) compare to the other expenses listed in the estimated initial investment (Item 7), such as real estate costs and equipment purchases?

Accepted Answer

NITIAL INVESTMENT

| Type of Expenditure                                                     | Amount                    | Method of Payment | When Due                                 | To Whom Payment Is To Be Made                                            |
|-------------------------------------------------------------------------|---------------------------|----------------------|------------------------------------------|--------------------------------------------------------------------------------|
| Initial Franchise Fee | \$25,000 (1) | Lump sum | On signing the Franchise Agreement | Us |
| Lease Review | \$0.00 to \$1,500 | As incurred | Before opening as incurred | Us |
| Fee |  |  |  |  |
| Grand Opening Advertising (2) | \$3,000 to \$6,000 | As incurred | As incurred | Advertising Providers |
| Initial Lease | \$9,000 to \$20,000 | As agreed | As specified in lease | Landlord |
| Payments (3) |  |  |  |  |
| Leasehold | \$120,000 to | As agreed | Before opening as incurred | Contractors and Suppliers |
| Improvements (4) | \$190,000 |  |  |  |
| Equipment, Fixtures, and Furniture (5) | \$50,000 to \$70,000 | As agreed | Before opening as incurred | Suppliers |
| Computer | \$4,000 to \$6,000 | As incurred | Before opening as incurred | Us and Suppliers |
| Technology and |  |  |  |  |
| POS System |  |  |  |  |
| Signage | \$5,000 to \$10,000 | As agreed | Before opening as incurred | Suppliers |
| (Indoor/Outdoor) |  |  |  |  |
| Initial Inventory and Operating Supplies | \$25,000 to \$35,000 | As agreed | Before opening as incurred | Our affiliate and Suppliers |
| Miscellaneous | \$2,000 to \$4,000 | As agreed | Before opening as incurred | Third Parties |
| Travel and Living |  |  |  |  |
| Expenses while |  |  |  |  |
| Training (7) |  |  |  |  |
| Insurance (8) | \$2,500 to \$5,000 | As agreed | Before opening as incurred | Insurance Companies |
| Professional Services, Business Licenses and Miscellaneous Expenses (9) | \$5,000 to \$7,500 | As agreed | Before opening as incurred | Professionals, Governmental Organizations, and other Third Parties |
| Additional Funds (three months) | \$20,000 to \$40,000 | As incurred | As incurred | Us, our affiliates, Suppliers and Employees |
| TOTALS(11) | \$270,500 t

Question 22

How does the Azal Coffee initial franchise fee (Item 5) compare to the ongoing fees, such as audit and inspection expenses (Item 6)?

Accepted Answer

M 6—OTHER FEES**

| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Audit and Inspection Expenses | Cost of audit or inspection plus employee expenses | On receipt of our billing | This cost must be paid if the audit is necessary because of your failure to furnish reports or financial information, or the audit discloses an understatement of 2% or more of Gross Sales. |
| Product and Supplier Approval Fee | Up to $3,000 | Before approval of a product or supplier | You may be required to pay this fee if you request that we approve a product or supplier. |
| Data Security Consultant and Cyber Insurance Costs | Cost of engaging vendor or of cyber insurance policy | Periodically by EFT that we initiate | We may require you to pay for a consultant on data security and/or for a cyber insurance policy.

Question 23

How does the Azal Coffee initial franchise fee (Item 5) compare to the total estimated initial investment (Item 7), and what percentage does it represent?

Accepted Answer

NITIAL INVESTMENT

| Type of Expenditure                                                     | Amount                    | Method of Payment | When Due                                 | To Whom Payment Is To Be Made                                            |
|-------------------------------------------------------------------------|---------------------------|----------------------|------------------------------------------|--------------------------------------------------------------------------------|
| Initial Franchise Fee | \$25,000 (1) | Lump sum | On signing the Franchise Agreement | Us |
| Lease Review | \$0.00 to \$1,500 | As incurred | Before opening as incurred | Us |
| Fee |  |  |  |  |
| Grand Opening Advertising (2) | \$3,000 to \$6,000 | As incurred | As incurred | Advertising Providers |
| Initial Lease | \$9,000 to \$20,000 | As agreed | As specified in lease | Landlord |
| Payments (3) |  |  |  |  |
| Leasehold | \$120,000 to | As agreed | Before opening as incurred | Contractors and Suppliers |
| Improvements (4) | \$190,000 |  |  |  |
| Equipment, Fixtures, and Furniture (5) | \$50,000 to \$70,000 | As agreed | Before opening as incurred | Suppliers |
| Computer | \$4,000 to \$6,000 | As incurred | Before opening as incurred | Us and Suppliers |
| Technology and |  |  |  |  |
| POS System |  |  |  |  |
| Signage | \$5,000 to \$10,000 | As agreed | Before opening as incurred | Suppliers |
| (Indoor/Outdoor) |  |  |  |  |
| Initial Inventory and Operating Supplies | \$25,000 to \$35,000 | As agreed | Before opening as incurred | Our affiliate and Suppliers |
| Miscellaneous | \$2,000 to \$4,000 | As agreed | Before opening as incurred | Third Parties |
| Travel and Living |  |  |  |  |
| Expenses while |  |  |  |  |
| Training (7) |  |  |  |  |
| Insurance (8) | \$2,500 to \$5,000 | As agreed | Before opening as incurred | Insurance Companies |
| Professional Services, Business Licenses and Miscellaneous Expenses (9) | \$5,000 to \$7,500 | As agreed | Before opening as incurred | Professionals, Governmental Organizations, and other Third Parties |
| Additional Funds (three months) | \$20,000 to \$40,000 | As incurred | As incurred | Us, our affiliates, Suppliers and Employees |
| TOTALS(11) | \$270,500 t

Question 24

How does the Azal Coffee initial franchise fee (Item 5) relate to the franchisee's overall financial obligations, including the estimated initial investment (Item 7) and potential ongoing fees (Item 6)?

Accepted Answer

INITIAL FEES**

You must pay an initial franchise fee of \$25,000 for an Azal Coffee franchise. The initial franchise fee is payable in full at the time you sign the Franchise Agreement.

All initial franchise fees are earned at the time of payment and are not refundable under any circumstances. Initial franchise fees are uniform. It is our intent to charge all new franchisees the same initial franchise fee.

You must also pay our affiliate, Wholesale \$70,000 to \$80,000 for your initial supply of coffee beans, tea, coffee and tea mixes, equipment, paper products, syrups, sauces, milk, cups, mugs, branded products, coffee supplies, bakery goods, uniforms, and other inventory items. This range also includes the estimated cost to ship the goods to your Franchise Location. You must pay this fee before you open and immediately upon invoice. This payment is not refundable.

As part of our lease approval process, we may have an attorney review the proposed lease to ensure that the proposed lease meets our requirements. We will have a right to charge you a non-refundable fee up to \$1,500 to cover the cost of that review. You must pay this fee within 7 days of demand. This payment is n

Question 25

How does the Azal Coffee initial franchise fee (Item 5) relate to the franchisee's potential for building equity in the business over time, considering the franchisor's brand recognition and ongoing support?

Accepted Answer

INITIAL FEES**

You must pay an initial franchise fee of \$25,000 for an Azal Coffee franchise. The initial franchise fee is payable in full at the time you sign the Franchise Agreement.

All initial franchise fees are earned at the time of payment and are not refundable under any circumstances. Initial franchise fees are uniform. It is our intent to charge all new franchisees the same initial franchise fee.

You must also pay our affiliate, Wholesale \$70,000 to \$80,000 for your initial supply of coffee beans, tea, coffee and tea mixes, equipment, paper products, syrups, sauces, milk, cups, mugs, branded products, coffee supplies, bakery goods, uniforms, and other inventory items. This range also includes the estimated cost to ship the goods to your Franchise Location. You must pay this fee before you open and immediately upon invoice. This payment is not refundable.

As part of our lease approval process, we may have an attorney review the proposed lease to ensure that the proposed lease meets our requirements. We will have a right to charge you a non-refundable fee up to \$1,500 to cover the cost of that review. You must pay this fee within 7 days of demand. This payment is n

Question 26

How does the Azal Coffee initial franchise fee (Item 5) relate to the franchisee's potential for generating revenue and profits, considering the franchisor's brand recognition and marketing support?

Accepted Answer

INITIAL FEES**

You must pay an initial franchise fee of \$25,000 for an Azal Coffee franchise. The initial franchise fee is payable in full at the time you sign the Franchise Agreement.

All initial franchise fees are earned at the time of payment and are not refundable under any circumstances. Initial franchise fees are uniform. It is our intent to charge all new franchisees the same initial franchise fee.

You must also pay our affiliate, Wholesale \$70,000 to \$80,000 for your initial supply of coffee beans, tea, coffee and tea mixes, equipment, paper products, syrups, sauces, milk, cups, mugs, branded products, coffee supplies, bakery goods, uniforms, and other inventory items. This range also includes the estimated cost to ship the goods to your Franchise Location. You must pay this fee before you open and immediately upon invoice. This payment is not refundable.

As part of our lease approval process, we may have an attorney review the proposed lease to ensure that the proposed lease meets our requirements. We will have a right to charge you a non-refundable fee up to \$1,500 to cover the cost of that review. You must pay this fee within 7 days of demand. This payment is n

Question 27

How does the Azal Coffee initial franchise fee (Item 5) relate to the franchisee's potential for long-term profitability, considering the ongoing fees and expenses associated with operating the franchise (Item 6)?

Accepted Answer

INITIAL FEES**

You must pay an initial franchise fee of \$25,000 for an Azal Coffee franchise. The initial franchise fee is payable in full at the time you sign the Franchise Agreement.

All initial franchise fees are earned at the time of payment and are not refundable under any circumstances. Initial franchise fees are uniform. It is our intent to charge all new franchisees the same initial franchise fee.

You must also pay our affiliate, Wholesale \$70,000 to \$80,000 for your initial supply of coffee beans, tea, coffee and tea mixes, equipment, paper products, syrups, sauces, milk, cups, mugs, branded products, coffee supplies, bakery goods, uniforms, and other inventory items. This range also includes the estimated cost to ship the goods to your Franchise Location. You must pay this fee before you open and immediately upon invoice. This payment is not refundable.

As part of our lease approval process, we may have an attorney review the proposed lease to ensure that the proposed lease meets our requirements. We will have a right to charge you a non-refundable fee up to \$1,500 to cover the cost of that review. You must pay this fee within 7 days of demand. This payment is n

Question 28

How does the Azal Coffee initial franchise fee (Item 5) relate to the franchisee's potential return on investment, considering the estimated initial investment (Item 7) and ongoing operating expenses?

Accepted Answer

[Item 5: INITIAL FEES]

You must pay an initial franchise fee of $25,000 for an Azal Coffee franchise. The initial franchise fee is payable in full at the time you sign the Franchise Agreement.

All initial franchise fees are earned at the time of payment and are not refundable under any circumstances. Initial franchise fees are uniform. It is our intent to charge all new franchisees the same initial franchise fee.

You must also pay our affiliate, Wholesale $70,000 to $80,000 for your initial supply of coffee beans, tea, coffee and tea mixes, equipment, paper products, syrups, sauces, milk, cups, mugs, branded products, coffee supplies, bakery goods, uniforms, and other inventory items. This range also includes the estimated cost to ship the goods to your Franchise Location. You must pay this fee before you open and immediately upon invoice. This payment is not refundable.

As part of our lease approval process, we may have an attorney review the proposed lease to ensure that the proposed lease meets our requirements. We will have a right to charge you a non-refundable fee up to $1,500 to cover the cost of that review. You must pay this fee within 7 days of demand. This payment is not refundable.

| Type of Expenditure                                                     | Amount                    | Method of Payment | When Due                                 | To Whom Payment Is To Be Made                                            |
|-------------------------------------------------------------------------|---------------------------|----------------------|------------------------------------------|--------------------------------------------------------------------------------|
| Initial Franchise Fee | $25,000 (1) | Lump sum | On signing the Franchise Agreement | Us |
| Additional Funds (three months) | $20,000 to $40,000 | As incurred | As incurred | Us, our affiliates, Suppliers and Employees |
| TOTALS(11) | $270,500 to $420,000 |  |  |  |

We recommend that you have at least 50% of your estimated initial investment in equity and no more than 50% of your estimated initial investment financed with debt.

Question 29

Can the terms of Azal Coffee's agreements with other franchisees differ materially from my agreement?

Accepted Answer

You acknowledge and agree that we are entering into this Agreement with you independently and separately from any franchise or license that we have granted or may grant to any other person or entity, and that you are not entering into this Agreement in reliance on or because of any other agreement that we have entered or may enter into with a third party. You acknowledge and agree that the terms of our agreements with third parties, now and in the future, may be materially different with respect to any terms and condition of this Agreement, including royalty fees, advertising fees, transfer fees, territorial exclusivity, renewals and training. These variations may be based on any factors or conditions that we deem to be in the best interest of the Azal Coffee franchise system or a particular Store, including the knowledge, experience and financial status of a franchisee, peculiarities of a particular location, customer base, density, lease provisions, business potential, population of trade area, existing business practices, or any other condition that we deem to be of importance to the operation of a specific Store. Also, these variations may result from us, in our sole discretion, compromising, forgiving, or settling claims or disputes with or against other franchisees. You will not be entitled to require us to disclose or grant to you a like or similar variation.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 30

What is the maximum interest rate that Azal Coffee can charge on overdue payments?

Accepted Answer

Your payments to us for royalty, local advertising fees, marketing fund contributions, mobile application and technology fees, training, renewal and transfer fees, management fees, mystery shopper fees, relocation fees, litigation expenses, late charges and interest, amounts owed for products or services provided by us or our affiliates, amounts owed for maintenance expenses we incur under Section 8.8, amounts owed for management fees, amounts owed for liquidated damage amounts, and all other amounts you owe to us or our affiliates must be made by electronic or similar funds transfer in the appropriate amounts from your bank account to our accounts, and at the places or in the manner we may specify. You must make payments at the times specified in this Agreement or as we may otherwise specify. You agree that we may specify payment by electronic fund transfers that we initiate. You must sign and deliver to your bank and to us the documents necessary to authorize and effectuate fund transfers as specified by us. You agree not to terminate the authorization as long as this Agreement is in effect. You agree not to close your bank account without providing us prior written notice and establishing a substitute bank account for the transfers. You also agree to make all required payments to us daily or weekly or at some other interval, instead of monthly or as otherwise provided in this Agreement, if we specify. You acknowledge that we may require you to make required payments at different intervals than other Azal Coffee franchisees.

## 4.14 No Setoff; Application of Payments.

Your obligations for the full and timely payment of the fees described in this Agreement and all other amounts owed to us are absolute and unconditional. You must not delay or withhold payment to us of all or part of those amounts based on our alleged nonperformance or for any other reason or put the fees or other amounts in escrow or setoff against any claims you may allege against us. We may apply any of your payments first to any accrued late charges or interest and then to any delinquent fees or other amounts outstanding before crediting the payment in the manner specified by you or to the current amount due.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 31

According to the Azal Coffee Collateral Assignment of Lease, under what conditions does the Franchisor have the option to accept the assignment of the lease?

Accepted Answer

- **3. Franchisor's Options.** Landlord and Franchisee grant to Franchisor the exclusive right, exercisable at the option of Franchisor, to be assigned all right, title and interest of Franchisee in and to the Lease and the Premises:
  - a. on the expiration or termination of the Franchise Agreement. Franchisor must give written notice of its intent to exercise this option within thirty (30) days of the event triggering the option;
  - b. on the expiration or termination of the Lease or on Franchisee's loss of its rights of possession to the Premises, whether by Franchisee's default under the Lease or otherwise. Landlord shall provide Franchisor notice of default as provided under Section 9 and Section 10. Franchisor shall exercise its right to accept assignment of the Lease within such periods; and
  - c. on Franchisees abandonment of the Premises. For this purpose, abandonment will be conclusively presumed if Franchisee fails to have the business open and fully operational for two (2) consecutive days.

On the giving of notice of exercise by Franchisor under this Section, the Lease, and all right, title and interest of Franchisee under the lease and to the Premises will be automatically, and without need of further instrument, assigned to Franchisor. If Franchisor does not give notice of exercise within the applicable time period, Franchisor will be deemed to have forfeited all its rights under this Section. Landlord and Franchisee agree to execute documents confirming this assignment in the form presented by Franchisor, including a short form of Lease suitable for recording.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 32

According to the Azal Coffee FDD, may Azal Coffee give a prospective franchisee who is seeking to buy a specific operating unit actual operating results of that unit?

Accepted Answer

We may give a prospective franchisee who is seeking to buy a specific operating unit, whether owned by us, an affiliate, or another franchisee, actual operating results of that unit.

Other than the preceding financial performance representation, we do not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor's management by contacting Ramzi Mohammed at 15010 W. Warren, Suite 113, Dearborn, Michigan, (313) 247-5364, the Federal Trade Commission, and the appropriate state regulatory agencies.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 47–48)

Question 33

According to the Azal Coffee FDD, what should a prospective franchisee do if they are purchasing an existing outlet?

Accepted Answer

We may give a prospective franchisee who is seeking to buy a specific operating unit, whether owned by us, an affiliate, or another franchisee, actual operating results of that unit.

Other than the preceding financial performance representation, we do not make any representations about a franchisee's future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor's management by contacting Ramzi Mohammed at 15010 W. Warren, Suite 113, Dearborn, Michigan, (313) 247-5364, the Federal Trade Commission, and the appropriate state regulatory agencies.

Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 47–48)

Question 34

According to the Azal Coffee franchise agreement, what condition must be met before Azal Coffee will approve the relocation of a Franchise Business?

Accepted Answer

- (d) You are able to maintain possession of the Franchise Location or you have been able to secure and develop, in compliance with our then applicable standards used in the granting of a franchise, suitable alternative premises within your Protected Area for your Store. Any alternative premises must be acceptable to and approved in advance by us.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 35

According to the Azal Coffee Franchise Disclosure Document, if any employee or other person speaking on behalf of the franchisor made any oral, written or visual claim, statement, promise or representation to you that stated, suggested, predicted or projected sales, revenues, expenses, earnings, income or profit levels at any Azal Coffee location or business, or the likelihood of success of your Franchise Business, what action should be taken?

Accepted Answer

| 4.         | Was any oral, written or visual claim or representation made to you that contradicted the disclosures in the Franchise Disclosure Document? Check one: (_) Yes (_) No. If yes, please state in detail the oral, written or visual claim or representation:                                                                                                                                                                                                                                                                                        |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 5.         | Except as may be stated in Item 19 of our Franchise Disclosure Document, did any employee or other person speaking on our behalf make any oral, written or visual claim, statement, promise or representation to you that stated, suggested, predicted or projected sales, revenues, expenses, earnings, income or profit levels at any Azal Coffee location or business, or the likelihood of success of your Franchise Business? Check one: (_) Yes (_) No. If yes, please state in detail the oral, written or visual claim or representation: |

Source: Item 22 — CONTRACTS (FDD page 51)

Question 36

According to the Azal Coffee Franchise Disclosure Document, if any oral, written or visual claim or representation contradicted the disclosures in the Franchise Disclosure Document, what action should be taken?

Accepted Answer

[Item 22: CONTRACTS] | 4. | Was any oral, written or visual claim or representation made to you that contradicted the disclosures in the Franchise Disclosure Document? Check one: (_) Yes (_) No. If yes, please state in detail the oral, written or visual claim or representation: | |------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | 5. | Except as may be stated in Item 19 of our Franchise Disclosure Document, did any employee or other person speaking on our behalf make any oral, written or visual claim, statement, promise or representation to you that stated, suggested, predicted or projected sales, revenues, expenses, earnings, income or profit levels at any Azal Coffee location or business, or the likelihood of success of your Franchise Business? Check one: (_) Yes (_) No. If yes, please state in detail the oral, written or visual claim or representation: | | 6. | Except as may be stated in Item 19 of our Franchise Disclosure Document, did any employee or other person speaking on our behalf make any statement or promise regarding the costs involved in operating a franchise that is not contained in the Franchise Disclosure Document or that is contrary to, or different from, the information contained in the Franchise Disclosure Document? Check one: (_) Yes (_) No. If yes, please comment: | | 7 . | Has any employee or other person speaking on our behalf made any statement, promise, or agreement concerning advertising, marketing, training, support service, or assistance that we will furnish to you that is contrary to, or different from, the information contained in the Franchise Disclosure Document? Check one: (_) Yes (_) No. If yes, please comment: | | 3. | Do you understand that the Franchise Agreement contains the entire agreement between you and us concerning the franchise for the Franchise Business and that any prior oral or written statements not set out in the Franchise Agreement will not be binding? Check one: (_) Yes (_) No. If no, please comment: | Source: Item 22 — CONTRACTS (FDD page 51)

Question 37

According to the Indiana amendment to the Azal Coffee Franchise Agreement, from whom must a franchisee purchase products if the designated supplier requirement is unlawful?

Accepted Answer

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Indiana Law. Under the Franchise Agreement amended for use in Indiana, if, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 38

Is Azal Coffee allowed to use its affiliate businesses to test the franchise system?

Accepted Answer

Except as described above, we do not have any affiliates that offer franchises in any line of business or that provide products or services to our franchisees. However, we may use one or more of our affiliate businesses to test our franchise system and system improvements and to sell required goods or services to our franchisees.

Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS AND AFFILIATES (FDD pages 9–11)

Question 39

Does Azal Coffee always conduct training in Dearborn, Michigan?

Accepted Answer

ich they have responsibility.

The length of training program will be approximately 7 days depending on your experience in the coffee industry. The training program will be conducted without charge for up to 2 persons (1 Designated Owners and 1 General Manager). We will train additional persons if you request, but we may charge a reasonable fee for each additional person trained. The training program will be conducted at our affiliate's Azal Coffee in Dearborn, Michigan or other location to be determined by us in our sole discretion. You are responsible for any traveling and living expenses of you or your employees during the training program. The persons attending training may be required to sign an agreement relating to confidentiality and/or noncompetition in a form approved by us before beginning the training program (see Exhibit E and Item 14).

Your Store must always be under the supervision of a General Manager that has attended and satisfactorily completed our training program (see Item 15).

Our training program will be conducted as often as necessary to ensure that new franchisees complete training before opening their Store.

The following table provides additional information about the training program and an approximate time estimate.

## **TRAINING PROGRAM**

| Subject                                      | Hours of Classroom Training | Hours of On-the Job Training | Location                                                             |
|----------------------------------------------|-----------------------------------|---------------------------------|----------------------------------------------------------------------|
| Azal Coffee History and Menu Basics | 1 hours                           | 1 hours                         | Dearborn, Michigan or other location to be determined by us.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–36)

Question 40

Does Azal Coffee apply changes to Intellectual Property uniformly across all similarly situated Azal Coffee stores, and if so, under what conditions?

Accepted Answer

o | | Franchisor and "you" and "your" refers to Franchisee. | | | #### **ARTICLE 1 - INTRODUCTION** ## 1.1 Franchise Systems. We and our affiliates, as the result of the expenditure of time, skill, effort, and money, have developed a coffee café that specializes in Yemeni-grown coffee and that sells coffee based beverages, cold drinks, teas, coffee beans, coffee accessories, pastries, baked goods, and other related items, all of which constitute trade secrets and are identified by the public with Azal Coffee products; prescribed exterior and interior design, decor, seating, fixtures, and furnishings; standards and specifications for products and supplies; service standards; uniform standards, specifications, and procedures for operations; training and assistance; and advertising and promotional programs (collectively "Systems"); all of which may be changed, improved, and further developed by us. The Systems we specify for use by the store concept to be licensed to you under to this Agreement are referred to as the "Franchise Systems." #### 1.2 Franchise Marks and Trade Dress. We identify our store concept by means of certain trademarks, service marks, trade names, logos, and other marks ("Marks") and by location designs, layouts, and other characteristics of visual appearance ("Trade Dress"). The Marks and Trade Dress we authorize for use by the store concept licensed to you under this Agreement are referred to as the "Franchise Marks" and the "Franchise Trade Dress." #### 1.3 Franchise Business. A business operated under the Franchise Systems, Franchise Marks, and Franchise Trade Dress, whether operated by us or our affiliates or other persons authorized by us, will be referred to in this Agreement as a "Store." The Store that you are licensed to operate under this Agreement will be referred to in this Agreement as the "Franchise Business." #### 1.4 Your Desire to Obtain a Franchise. You recognize the advantages of operating under the Franchise Systems, Franchise Marks, and Franchise Trade Dress and desire to obtain the right to operate a Store. We are willing to grant you a license to open and operate a Store on the terms and conditions in this Agreement. #### **ARTICLE 2 - GRANT OF FRANCHISE** #### 2.1 Grant of Franchise. We grant you the nonexclusive right to use the Franchise Marks, Franchise Trade Dress, and the Franchise Systems in connection with the operation of a single Store in accordance with this Agreement and our "Brand Standards Manual" (as defined in Section 8.2). The Franchise Business must be operated at the location designated in accordance with Section 6.1 (the designated location is referred to as the "Franchise Location"). Source: Item 22 — CONTRACTS (FDD page 51)

Question 41

Can the Authorized Products that I am required to sell at my Azal Coffee store differ from those required at other stores?

Accepted Answer

The Authorized Products that we may authorize or require you to sell may differ from those that we authorize or require other Stores to sell based on regional differences in products and services authorized by us, sales of products or services on a limitedtime-only basis that are not available to all Stores, the test marketing of products or services, or other business reasons in our discretion (Section 8.6 of Franchise Agreement).

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–36)

Question 42

Is the choice of law for the Azal Coffee Franchise Agreement subject to any limitations?

Accepted Answer

| Provision | Section in Agreement | Summary |
|---|---|---|
| franchise is terminated or |  |  |
| expires |  |  |
| s. Modification of | Section 20.11 of | No modifications unless in writing, but |
| Franchise Agreement | Franchise Agreement | specifications subject to change by us. |
| t. Integration/merger clause | Section 20.11 of Franchise Agreement | Only the terms of the Franchise Agreement are binding (subject to state law); however, no claim made in a Franchise Agreement is intended to disclaim the express representations made in this Franchise Disclosure Document. |
| u. Dispute resolution by arbitration or mediation | Section 18.1 of the Franchise Agreement | Except for disputes over the ownership and validity of the Trademarks and actions by us for injunctive relief and subject to state law, all disputes are subject to binding arbitration in Michigan. |
| v. Choice of forum | Section 18.4 of Franchise Agreement | Litigation must be where our principal place of business is located at the time of filing (subject to state law). |
| w. Choice of law | Section 18.3 of | Michigan law applies (subject to state |
|  | Franchise Agreement | law). |

Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–47)

Question 43

What is the condition if the Seller is financing the Azal Coffee franchise transfer?

Accepted Answer

- (k) If the transfer involves installment payments by the transferee to the Seller, the Seller must sign a subordination agreement under which the Seller subordinates its right to receive any installment from the transferee to our right to receive all amounts due to us through the due date of the installment. The subordination agreement must be in a format and contain terms and conditions specified by us.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 44

What is the dependency for Azal Coffee to provide on-site training and a final inspection after an interruption?

Accepted Answer

If we interrupt on-site training and inspection because your Franchise Business is not ready to open, we will provide on-site training and a final inspection only after payment of the above listed expenses and certification by you that your Franchise Business is ready to open.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–36)

Question 45

Who determines the specific number of days Azal Coffee will provide representatives to assist in the initial operation of the Franchise Business?

Accepted Answer

of Franchise Agreement).
- 3. Provide 1 or more representatives for up to 5 days from opening (the specific number of days will be determined by us) to assist in the initial operation of your Store (Section 5.5) of Franchise Agreement). This obligation does not apply on renewal or transfer (Section E of Renewal Addendum and Section E of Transfer Addendum). If you request the assistance of our representatives beyond the 5-day period, we may provide the representatives for an additional period of time, but you must pay a charge for the additional services in an amount determined by us.
- 4. Designate the Authorized Products to be offered by the Store and provide you with updates in our specifications for the Authorized Products. We will also provide sources of supply for all products used in the Store and will review for approval any products or services or suppliers requested by you, except with respect to any Designated Products or Services (Sections 5.6, 8.5 and 8.6 of Franchise Agreement).

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–36)

Question 46

Is the effectiveness of the Azal Coffee Franchise Agreement dependent on the closing of the transaction under the Purchase Agreement?

Accepted Answer

| THIS ADDENDUM is made the day of, 20, and modifies a | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Franchise Agreement of the same date (the "Franchise Agreement") entered into by Durar Investment, LLC, a Michigan limited liability company, ("Franchisor") and | | , a(" Franchisee "). In this | | , a | | | | A. Introduction . You entered into an agreement ("Purchase Agreement") for the | | purchase of the Azal Coffee located at ("Store") from the current owner of the Store (the "Seller"). We and you | | desire to amend the Franchise Agreement to reflect the fact that you are acquiring an open and | | operating Store by transfer from one of our existing franchisees. All capitalized terms not otherwise | | defined in this Addendum will have the same meaning as in the Franchise Agreement. | | | | B. Contingency ; Date of Effectiveness of Franchise Agreement . The rights and | | obligations of the parties under the Franchise Agreement are contingent on: (1) your completion of | | our initial training program; and (2) the closing of the transaction under the Purchase Agreement and the transfer of possession and ownership of the Store to you. If these contingencies are not | | met by, 20, we may, at our option, terminate the Franchise Agreement. If | | we terminate the Franchise Agreement as provided in this Section, we will have the right to retain | | the transfer fee paid by you (or the Seller) and otherwise the parties will have no further rights or | | obligations to each other under the Franchise Agreement; provided that, the confidentiality and | | non-competition provisions of the Franchise Agreement will survive the termination. If these | | contingencies are met by the date specified above in this Section, then the Franchise Agreement | | will become effective on the date that you receive possession and ownership of the Store (the "Effective Date"). | | Ellective Date ). Source: Item 22 — CONTRACTS (FDD page 51)

Question 47

Is the effectiveness of the Azal Coffee Franchise Agreement dependent on completing the initial training program?

Accepted Answer

| THIS ADDENDUM is made the day of, 20, and modifies a | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Franchise Agreement of the same date (the "Franchise Agreement") entered into by Durar Investment, LLC, a Michigan limited liability company, ("Franchisor") and | | , a(" Franchisee "). In this | | , a | | | | A. Introduction . You entered into an agreement ("Purchase Agreement") for the | | purchase of the Azal Coffee located at ("Store") from the current owner of the Store (the "Seller"). We and you | | desire to amend the Franchise Agreement to reflect the fact that you are acquiring an open and | | operating Store by transfer from one of our existing franchisees. All capitalized terms not otherwise | | defined in this Addendum will have the same meaning as in the Franchise Agreement. | | | | B. Contingency ; Date of Effectiveness of Franchise Agreement . The rights and | | obligations of the parties under the Franchise Agreement are contingent on: (1) your completion of | | our initial training program; and (2) the closing of the transaction under the Purchase Agreement and the transfer of possession and ownership of the Store to you. If these contingencies are not | | met by, 20, we may, at our option, terminate the Franchise Agreement. If | | we terminate the Franchise Agreement as provided in this Section, we will have the right to retain | | the transfer fee paid by you (or the Seller) and otherwise the parties will have no further rights or | | obligations to each other under the Franchise Agreement; provided that, the confidentiality and | | non-competition provisions of the Franchise Agreement will survive the termination. If these | | contingencies are met by the date specified above in this Section, then the Franchise Agreement | | will become effective on the date that you receive possession and ownership of the Store (the "Effective Date"). | | Ellective Date ). | | C. Refurbishing of Franchise Location. You must complete the refurbishing, | | updating, upgrading, construction and/or improvement of the Franchise Location and the | | equipment, fixtures and signs at the Franchise Location as specified below. These actions must | | be completed within 90 days of the date of the Effective Date of this Addendum. | | | | Source: Item 22 — CONTRACTS (FDD page 51)

Question 48

Is the effectiveness of the Azal Coffee Franchise Agreement dependent on the transfer of possession and ownership of the Store?

Accepted Answer

our Store opens for business unless sooner terminated as provided in this Agreement.

#### 3.2 Option.

You will have the option to remain an Azal Coffee franchisee for two (2) additional periods of five (5) years if, at the beginning of the option period, all of the following conditions are fulfilled:

- (a) You are not in default under this Agreement or any other agreement with us or our affiliates and no affiliate of yours is in default under any agreement with us or our affiliates.
- (b) Within the last thirty-six (36) months we have not sent you two (2) or more notices of default of the terms of this Agreement or of any of our specifications, standards, or operating procedures (whether or not the notices related to the same or different violations and whether or not you have remedied those violations).
- (c) You provide written notice of your intent to continue as a franchisee not more than twelve (12) months and not less than six (6) months before the beginning of the option period.
- (d) You are able to maintain possession of the Franchise Location or you have been able to secure and develop, in compliance with our then applicable standards used in the granting of a franchise, suitable alternative premises within your Protected Area for your Store. Any alternative premises must be acceptable to and approved in advance by us.
- (e) You agree to take any action specified by us to make the Franchise Business comply with current appearance, Franchise Trade Dress, equipment, fixture, and signage requirements. You acknowledge that we may not uniformly impose refurbishing obligations on renewal of our franchises based on numerous factors and that we may require you to take steps to refurbish the Franchise Location that we have not required of other franchisees.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 49

What expenses must the Azal Coffee franchisee pay if the Franchise Business is not ready to open when the representative arrives?

Accepted Answer

If it appears you are ready to open, but the Franchise Business is not ready to open when the representative arrives for training and/or final inspection, you must pay all travel and living expenses incurred by us or our agents and the wages of our employees or independent contractors or agents in connection with provision of the on-site training and inspection. If we interrupt on-site training and inspection because your Franchise Business is not ready to open, we will provide on-site training and a final inspection only after payment of the above listed expenses and certification by you that your Franchise Business is ready to open.

Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–36)

Question 50

What expenses will an Azal Coffee franchisee have to pay if they reschedule the representative's travel due to not being ready to open?

Accepted Answer

If you request additional assistance at any time, you will be responsible for our trainer's per diem fee and related travel costs. You must also pay wages, employment related expenses, travel, and living expenses for your employees. If we, in our sole discretion, complete the opening assistance and training and determine that your management staff needs additional training, you are responsible for the additional training costs, including wages, travel, and living expenses of our staff. If you or any member of your team fails to complete the training program to our satisfaction, in our sole and unfettered judgment, we may terminate this Agreement.

Source: Item 22 — CONTRACTS (FDD page 51)

Question 51

What fees are included in the leasehold improvements category for an Azal Coffee franchise if I request a general contractor other than the one designated by Azal Coffee?

Accepted Answer

This category will include mechanical installations (e.g., HVAC), leasehold improvements (e.g. walls and counters, wall and floor coverings, ceilings, lighting, electrical and plumbing) as well as the cost of a qualified architect to prepare a site plan and construction drawings for the Franchise Location.

This category also includes fees you may be required to pay to us for site inspections if you request and we approve your use of a general contractor other than the general contractor designated by us.

The costs of these items may vary considerably depending on the size, physical condition and location of the premises and the amount of the costs, if any, a landlord may be willing to assume (however, if the landlord assumes costs, you will probably pay a higher rent for the location and you may have to personally guaranty the lease payments for a period of time to allow the landlord to amortize its costs).

The estimated cost assumes the landlord will provide you with a "white box," including utility hookups, etc. or will directly pay or reimburse you for a portion of the expenses.

If the landlord does not provide a "white box" or pay or reimburse you for a portion of the expenses, you may have to incur substantial additional expenses for leasehold improvements.

Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 19–22)

Question 52

Does the Azal Coffee franchise agreement addendum for Hawaii contain any specific obligations for the franchisee?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 53

Does the Azal Coffee franchise agreement addendum for Hawaii contain any specific obligations for the franchisor?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 54

Does the Azal Coffee franchise agreement addendum for Hawaii depend on the franchisee obtaining any specific licenses or permits in Hawaii?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 55

Does the Azal Coffee franchise agreement addendum for Hawaii have its own effective date?

Accepted Answer

|    | State Cover Page                          | F | List of Azal Coffee Franchisees        |
|----|-------------------------------------------|---|----------------------------------------|
|  | Notice under Michigan Franchise Inv. Law |  |
| Α | List of State Administrators and List of Agents for Service of Process | G | List of Franchisees That Have Left the System |
| В | Franchise Agreement | Н | Financial Statements |
| С | Renewal Addendum | ı | State Specific Disclosures and Addenda |
| D1 | Transfer Addendum | J | State Effective Dates |
| D2 | Franchise Termination and Release Agreement | K | Receipt (2 Copies) |
| Е | Confidentiality/Non-Competition Agreement |  |  |

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 56

Does the Azal Coffee franchise agreement addendum for Hawaii impose any additional conditions on the franchisee's operation?

Accepted Answer

## **HAWAII**

1.  The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2.  The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 57

Does the Azal Coffee franchise agreement addendum for Hawaii impose any financial thresholds on the franchisee?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 58

Does the Azal Coffee franchise agreement addendum for Hawaii impose any geographic limits beyond the state of Hawaii?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 59

Does the Azal Coffee franchise agreement addendum for Hawaii prohibit any actions by the franchisee that are otherwise permitted in the standard agreement?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 60

Does the Azal Coffee franchise agreement addendum for Hawaii require any additional fees?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 61

Does the Azal Coffee franchise agreement addendum for Hawaii require the franchisee to participate in any specific marketing campaigns unique to Hawaii?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 62

Does the Azal Coffee franchise agreement addendum for Hawaii require the franchisee to take any specific actions not outlined in the standard agreement?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 63

Does the Azal Coffee franchise agreement addendum for Hawaii specify any conditions under which the addendum itself may be terminated?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

Question 64

Does the Azal Coffee franchise agreement addendum for Hawaii supersede the original franchise agreement in any way?

Accepted Answer

## **HAWAII**

1. The following is in addition to the disclosure in Item 8 of the Franchise Disclosure Document:

The requirement for you to purchase products from us or some other entity as we designate in writing, may be unlawful under Hawaii Law. If, and to the extent, that requirement is found to be unlawful, that requirement will be void (to the extent unlawful) and you must purchase those products from approved suppliers.

2. The following is in addition to the disclosure in Item 17 of the Franchise Disclosure Document:

Any release signed by you as a condition of renewal or transfer will not exclude claims you may have under the Hawaii Investment Law

Source: Item 23 — RECEIPTS (FDD pages 51–204)

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