What does Article 6 of the Azal Coffee franchise agreement cover regarding the location of the franchise?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 22: CONTRACTS]
-
- Introduction. Franchisee has entered into a Franchise Agreement with Durar Investment, LLC ("Franchisor"). The Franchise Agreement requires Franchisee's lease for the Premises to contain certain provisions. In consideration of the agreement of Franchisor to enter into a Franchise Agreement with Franchisee for an Azal Coffee franchise to be located at the Premises, Landlord and Franchisee agree that the provisions contained in this Addendum will be applicable to the Lease notwithstanding anything to the contrary contained in the Lease.
- 2. Use. The Premises must not be used for any purpose other than the operation of an Azal Coffee during the term of the Lease, including renewals.
- 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)
What This Means (2024 FDD)
Based on the 2024 Azal Coffee Franchise Disclosure Document, Article 6 is not provided in the excerpts. However, the FDD does include information regarding the location of the franchise in an addendum to the lease agreement.
According to the lease addendum, the premises must be used solely for the operation of an Azal Coffee franchise during the lease term, including any renewals. This ensures that the location is exclusively dedicated to the Azal Coffee business, preventing any other type of business from operating there.
The franchisor, Durar Investment, LLC, retains the exclusive right to be assigned the franchisee's lease under certain conditions. These conditions include the expiration or termination of the Franchise Agreement, the expiration or termination of the lease, or the franchisee's abandonment of the premises. Abandonment is conclusively presumed if the business is not open and fully operational for two consecutive days. This provision protects the franchisor's interest in maintaining the location for Azal Coffee operations, even if the franchisee defaults or leaves the location.
The franchisor must provide written notice of its intent to exercise its option to assume the lease within specified timeframes, such as 30 days of the event triggering the option. If the franchisor exercises this option, the lease and all rights to the premises are automatically assigned to the franchisor. If the franchisor fails to provide notice within the applicable time, it forfeits its rights under this section. Both the landlord and franchisee must execute documents confirming this assignment, including a short form of lease suitable for recording. This ensures a smooth transition of the lease to the franchisor if they choose to exercise their option.