What agreements must the Azal Coffee franchisee and seller sign at the time of transfer?
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- 2. Termination of Franchise Agreement. You and we agree that the Franchise Agreement is terminated as of the effective date of this Agreement.
- Release. As a condition to our consent to your transfer to the Buyer, you release and forever discharge us and our representatives, owners, employees, officers, agents and assigns from all liability, right, claim, debt and cause of action whatsoever, known or unknown, suspected or unsuspected, which you ever had, now have or may have at any time based on any agreement entered into between the parties on or before the date of this Agreement or based on any act or omission occurring on or before the date of this Agreement; provided, that nothing contained in this Section will affect your rights and obligations under this Agreement.
- 4. Your Duties. Effective on the date of this Agreement, and except as may be authorized by any other franchise agreement between us and you, your rights to use the Intellectual Property and the Franchise Systems and all other rights associated with being an authorized Azal Coffee franchisee will cease and, you must do the following:
- (a) You must immediately and permanently discontinue the use of the Intellectual Property, the Confidential Information, the Franchise Systems, and any trademarks, names, and logos similar to the Franchise Marks or Trade Dress, and any other materials that may, in any way, indicate that you are or were an Azal Coffee franchisee, or in any way associated with us.
- (b) Except as assumed by the Buyer, you must immediately discontinue all advertising placed or ordered. Except as transferred to the Buyer, you must remove and deliver to us all sign faces, advertising and promotional material, letterhead, forms, and any other items containing the Intellectual Property or the Confidential Information. You are responsible for the cost of sign and other identification removal and the cost of shipping signs and other materials to us.
- (c) You must cease using the Brand Standards Manual, the Confidential Information, Intellectual Property, and all other proprietary business information provided by us and, except as transferred to the Buyer, must return to us all copies of the Brand Standards Manual, the Confidential Information, Intellectual Property, and other bulletins
or other materials received from us containing information about the Intellectual Property and Store.
- (d) Except as transferred to the Buyer, you must immediately and permanently cease to use all telephone and fax numbers, email addresses, website addresses, domain names, social media accounts, and other electronic media that have been used in the Franchise Business (the "Telephone Numbers" and "Electronic Media") and if requested by us, must assign some or all of these Telephone Numbers and Electronic Media to us. You acknowledge that as between you and us, we have the sole right to all Telephone Numbers and Electronic Media used in the Franchise Business and all written and online directory listings associated with the Franchise Business. You authorize us, and appoint us and any of our officers as your attorney-in-fact, to direct the applicable service providers and all listing agencies to transfer those items to us or our agent or assignee if you fail or refuse to do so. You authorize the applicable service providers and all listing agencies to accept the direction in this Agreement as conclusive evidence of our exclusive rights in the Telephone Numbers and Electronic Media and directory listings and our authority to direct their transfer.
- (e) You must cease using any business name containing any of the Marks and must file an abandonment or discontinuance of the name with the appropriate local, county or state agency.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, both the franchisee (seller) and the buyer must fulfill several requirements and potentially sign agreements during a transfer. The seller must agree to terminate the existing Franchise Agreement with Azal Coffee. As a condition of Azal Coffee's consent to the transfer, the seller must release Azal Coffee from any liabilities, claims, or causes of action that the seller may have against them. The seller must also comply with certain obligations, such as discontinuing the use of Azal Coffee’s intellectual property and confidential information, and ceasing all advertising, unless the buyer assumes these responsibilities. The seller is responsible for the costs associated with removing signs and other identifying materials and shipping them to Azal Coffee.
Additionally, the proposed buyer must adhere to specific conditions, including compliance with current appearance, trade dress, equipment, and signage requirements, which may necessitate upgrades or modifications to the franchise location. The buyer and its affiliates must not be involved with any business that competes with Azal Coffee. The buyer may be required to sign an acknowledgement of compliance with this non-compete provision. The landlord must also allow the lease for the franchise location to be transferred to the buyer.
Furthermore, if the transfer involves installment payments from the buyer to the seller, the seller is required to sign a subordination agreement. This agreement ensures that Azal Coffee’s right to receive any amounts due to them takes precedence over the seller's right to receive installment payments from the buyer. The subordination agreement must adhere to the format and terms specified by Azal Coffee. The seller and the proposed buyer must also comply with any other standard procedures that Azal Coffee specifies for the transfer.
These conditions and required agreements are designed to protect Azal Coffee’s franchise marks and systems and ensure a smooth transition while maintaining brand standards and compliance. A prospective franchisee should carefully review these requirements and understand the obligations of both the seller and the buyer during a transfer to avoid any potential issues or delays.