Is the effectiveness of the Azal Coffee Franchise Agreement contingent on certain events?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
| THIS ADDENDUM is made the day of, 20, and modifies a |
|---|
| Franchise Agreement of the same date (the "Franchise Agreement") entered into by Durar Investment, LLC, a Michigan limited liability company, ("Franchisor") and |
| , a(" Franchisee "). In this |
| , a |
| A. Introduction . You entered into an agreement ("Purchase Agreement") for the |
| purchase of the Azal Coffee located at ("Store") from the current owner of the Store (the "Seller"). We and you |
| desire to amend the Franchise Agreement to reflect the fact that you are acquiring an open and |
| operating Store by transfer from one of our existing franchisees. All capitalized terms not otherwise |
| defined in this Addendum will have the same meaning as in the Franchise Agreement. |
| B. Contingency ; Date of Effectiveness of Franchise Agreement . The rights and |
| obligations of the parties under the Franchise Agreement are contingent on: (1) your completion of |
| our initial training program; and (2) the closing of the transaction under the Purchase Agreement and the transfer of possession and ownership of the Store to you. If these contingencies are not |
| met by, 20, we may, at our option, terminate the Franchise Agreement. If |
| we terminate the Franchise Agreement as provided in this Section, we will have the right to retain |
| the transfer fee paid by you (or the Seller) and otherwise the parties will have no further rights or |
| obligations to each other under the Franchise Agreement; provided that, the confidentiality and |
| non-competition provisions of the Franchise Agreement will survive the termination. If these |
| contingencies are met by the date specified above in this Section, then the Franchise Agreement |
| will become effective on the date that you receive possession and ownership of the Store (the "Effective Date"). |
| Ellective Date ). |
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the Franchise Agreement's effectiveness is contingent upon specific events for franchisees acquiring an existing Azal Coffee store. The rights and obligations outlined in the Franchise Agreement are dependent on two key conditions. First, the franchisee must successfully complete Azal Coffee's initial training program. Second, the transaction for purchasing the existing store must close, which includes the transfer of possession and ownership to the new franchisee.
If these conditions are not fulfilled by a specified date, which is left blank in the excerpt, Azal Coffee has the option to terminate the Franchise Agreement. In the event of termination due to unmet contingencies, Azal Coffee retains the transfer fee paid by the franchisee or seller. However, both parties are then released from further obligations under the Franchise Agreement, with the exception that confidentiality and non-competition provisions remain in effect.
If the outlined contingencies are successfully met by the agreed-upon date, the Franchise Agreement becomes effective on the date the franchisee receives possession and ownership of the Azal Coffee store. This clause ensures that the Franchise Agreement is only fully enacted once the franchisee is adequately trained and has completed the purchase of the existing franchise location. Prospective franchisees should confirm the specific dates and amounts with the franchisor.