Does the confidentiality agreement for Azal Coffee extend to Family Members of the Franchisee Parties?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
r Term.
On the termination (including termination on transfer), expiration, or non-renewal of this Agreement, you and your shareholders, officers, directors, partners, members, managers, owners and investors, Family Members, and affiliates, must not, for a period of three (3) years commencing on the later of the effective date of termination, expiration, or non-renewal, or the date of any Court order enforcing this provision, directly or indirectly, engage in any activity in competition with us or our franchisees and licensees, including involvement, whether as an owner (except ownership of no more than one percent (1%) of a publicly traded entity), partner, director, officer, member, manager, employee, consultant, lender, representative or agent, or in any other capacity in any business that is involved, in whole or in part, in a Competing Business or in any business or entity that franchises, licenses or otherwise grants to others the right to operate a Competing Business; provided that, the restrictions in this Section will only apply within the "Geographic Areas" (defined in Section 13.4).
13.3 Other Restrictions.
You and your shareholders, officers, directors, partners, members, managers, owners and investors, Family Members, and affiliates, must not, during the term of this Agreement and for a period of three (3) years after termination, expiration, or non-renewal of this Agreement, directly or indirectly: (a) divert or attempt to divert any business or customer of the Franchise Business or any other Store to any Competing Business by direct or indirect inducements or otherwise; (b) sponsor, appoint or encourage or influence or promote friends, relatives or associates to operate a Competing Business;
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the confidentiality agreement does extend to Family Members of the Franchisee Parties. The FDD defines "Family Members" as individuals with specific relationships to the franchisee or their business affiliates. These relationships include spouse, children, grandchildren, stepchildren, parents, siblings, spouse's parents, and spouse's siblings.
Azal Coffee's FDD states that Franchisee Parties, along with their shareholders, officers, directors, members, managers, partners, owners, investors, Family Members, and affiliates, are restricted from certain activities during the term of the Franchise Agreement and for three years after its termination. These restrictions include diverting business, sponsoring competing businesses, or employing individuals involved in competitive activities. This indicates that Family Members are explicitly included in the scope of these confidentiality and non-compete obligations.
This has significant implications for a prospective Azal Coffee franchisee. It means that not only are franchisees themselves bound by confidentiality and non-compete clauses, but their close family members are as well. This is a stricter-than-average requirement compared to some franchise systems, where only the direct franchisee is responsible. Franchisees need to ensure their family members understand these obligations to avoid unintentional breaches of the agreement, which could lead to legal or financial repercussions.