Who are considered 'Franchisee Parties' subject to the non-competition restrictions in the Azal Coffee Franchise Agreement?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- c) The Franchisee Parties and their shareholders, officers, directors, members, managers, partners, owners, and investors, Family Members, and affiliates, must not, during the term of the Franchise Agreement and for a period of three (3) years after termination, expiration, non-renewal, or any other end of the Franchise Agreement, for any reason whatsoever, 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; or (c) employ any person or furnish or permit access to the Information to any person who is engaged or has arranged to become engaged in any activity in competition with Azal Coffee Stores, including involvement, either as an owner (except no more than one percent (1%) of the publicly traded securities of an entity), partner, director, officer, member, manager, employee, consultant, lender, representative, or agent, or in any other capacity, of 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.
d) The Franchisee Parties acknowledge and agree that if any of the Franchisee Parties should violate the provisions of this Section 4 with respect to the operation of a Competing Business following expiration, termination, or any other end of the Franchise Agreement, then the period for which the prohibition stated therein shall be extended until three (3) years following the date such Franchisee Parties ceases all activities that are in violation of this Section 4.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the non-competition restrictions apply to 'Franchisee Parties' and their shareholders, officers, directors, members, managers, partners, owners, and investors, Family Members, and affiliates. This means that not only the franchisee themselves but also a wide range of related individuals and entities are bound by these restrictions.
The restrictions prevent these parties from diverting business or customers from the Azal Coffee franchise, sponsoring or encouraging others to operate competing businesses, or employing individuals involved in competitive activities. The definition of 'Family Members' includes spouses, children, grandchildren, stepchildren, parents, siblings, spouse's parents, and spouse's siblings, further extending the reach of these restrictions.
These non-compete terms are in effect during the term of the Franchise Agreement and for three years after its termination, expiration, non-renewal, or any other end. If any of the Franchisee Parties violate these restrictions by operating a Competing Business, the prohibition period is extended until three years after they cease all violating activities. This broad scope is designed to protect Azal Coffee's business interests and prevent franchisees and related parties from using confidential information or relationships to compete against the franchise system after their involvement ends.