What conditions must be met before Azal Coffee will consent to a proposed transfer?
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, there are several conditions that must be met before the company will consent to a proposed franchise transfer. These stipulations are designed to protect Azal Coffee's brand standards and franchise system.
First, either 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. This may involve updates or renovations to align the business with the latest brand image. Second, the proposed new franchisee (including its owners, shareholders, officers, etc.) must not be involved with any business that competes with Azal Coffee. The transferee may be required to sign an acknowledgement confirming compliance with this non-compete provision.
Additionally, if the transfer involves the buyer making installment payments to the seller, 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 buyer until Azal Coffee is fully paid. The landlord must also approve the transfer of the lease for the franchise location to the new franchisee. Finally, both the seller and the proposed buyer must comply with any other standard procedures that Azal Coffee specifies for transfers. Azal Coffee states that these conditions are necessary to protect its franchise marks and system and do not impose unreasonable restrictions on the transfer.