What is the definition of 'Seller' in the context of transferring an Azal Coffee franchise?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to the 2024 Azal Coffee Franchise Disclosure Document, in the context of transferring a franchise, the 'Seller' refers to the current franchisee who is transferring their franchise rights to a new owner, the 'transferee'.
Specifically, if the transfer of the Azal Coffee franchise involves the new franchisee making installment payments to the current franchisee, the current franchisee ('Seller') must sign a subordination agreement. This agreement ensures that Azal Coffee's right to receive any amounts owed to them takes precedence over the current franchisee's right to receive installment payments from the new franchisee. The subordination agreement's format and terms are dictated by Azal Coffee.
Additionally, the Azal Coffee FDD states that the current franchisee ('Seller'), along with the proposed new franchisee ('transferee'), must adhere to any standard procedures that Azal Coffee specifies for the transfer. This highlights the franchisor's control over the transfer process to ensure brand consistency and financial security.