What application procedures must a proposed transferee follow to be approved by Azal Coffee?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- (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)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, several conditions must be met for a transfer of a franchise to be approved. The current franchisee or the proposed new franchisee must take actions to ensure the franchise business complies with Azal Coffee's current standards for appearance, trade dress, equipment, and signage. These updates may be required either before the transfer is finalized or within a specific timeframe after the transfer.
Furthermore, the proposed new franchisee, along with their owners, shareholders, officers, directors, partners, members, investors, employees, agents, family members, and affiliates, must not be involved with any business that competes with Azal Coffee. Azal Coffee may require the transferee to sign an acknowledgement confirming their compliance with this non-compete provision. If the transfer involves the transferee making installment payments to the seller (the current franchisee), the seller must sign a subordination agreement. This agreement ensures that Azal Coffee's right to receive any amounts due from the franchisee takes precedence over the seller's right to receive installment payments from the transferee, and the agreement must be in a format and contain terms and conditions specified by Azal Coffee.
Additionally, the franchisee's landlord must permit the transfer of the franchise location's lease to the new franchisee. Finally, both the current franchisee (seller) and the proposed new franchisee (transferee) must adhere to any other standard procedures that Azal Coffee specifies. Azal Coffee states that these conditions are necessary to protect its franchise marks and systems and do not impose unreasonable restrictions on the transfer.
Prospective franchisees should note that these transfer requirements are typical in franchising to maintain brand consistency and protect the franchise system. It is important for both the seller and the buyer to understand these conditions thoroughly to ensure a smooth transfer process. Franchisees looking to sell their Azal Coffee business should be aware of these stipulations, as failure to comply can impede the transfer process.