What financial obligations must be met by the seller and current Azal Coffee franchisee before a transfer can occur?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- (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.
- (f) Throughout the term of this Agreement you have satisfied all material reporting requirements and all monetary obligations to us and our affiliates, suppliers, vendors, and creditors (excepting reasonable disputes that you are attempting in good faith to resolve) within the amount of time specified for satisfaction or cure of default with respect to the obligation.
- 4. Franchisor's Rights. Upon Franchisor's exercise of its option to accept assignment of the Lease, Franchisee shall remain liable for any amounts owing, or any other default occurring,
prior to the effective date of the assignment.
- (b) Except as assumed by the Buyer, you must immediately discontinue all advertising placed or ordered. Except as transferred to the Buyer, you must remove and deliver to us all sign faces, advertising and promotional material, letterhead, forms, and any other items containing the Intellectual Property or the Confidential Information. You are responsible for the cost of sign and other identification removal and the cost of shipping signs and other materials to us.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, a current franchisee looking to transfer their franchise must meet certain financial obligations. The franchisee must not be in default under the Franchise Agreement or any other agreement with Azal Coffee or its affiliates. This means all payments for royalties, advertising fees, products, services, or any other amounts owed to Azal Coffee must be current.
Additionally, the seller may need to sign a subordination agreement if the transfer involves installment payments from the buyer. This agreement ensures that Azal Coffee's right to receive any amounts due from the seller takes precedence over the seller's right to receive installment payments from the buyer. The subordination agreement must be in a format and contain terms and conditions specified by Azal Coffee.
Furthermore, the franchisee is responsible for the cost of sign and other identification removal and the cost of shipping signs and other materials to Azal Coffee. The franchisor also retains the right to pursue the franchisee for any amounts owed or defaults occurring before the transfer's effective date, even after the lease is assigned. These provisions protect Azal Coffee's financial interests and ensure a smooth transition during the transfer process.