Does the Azal Coffee franchise agreement grant franchisees any protected area or exclusivity?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
our Store opens for business unless sooner terminated as provided in this Agreement.
3.2 Option.
You will have the option to remain an Azal Coffee franchisee for two (2) additional periods of five (5) years if, at the beginning of the option period, all of the following conditions are fulfilled:
- (a) You are not in default under this Agreement or any other agreement with us or our affiliates and no affiliate of yours is in default under any agreement with us or our affiliates.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to the 2024 Azal Coffee Franchise Disclosure Document, the franchise agreement may grant franchisees a protected area. Paragraph 3.2(d) discusses the franchisee's ability to secure suitable alternative premises within their Protected Area if they cannot maintain possession of the original Franchise Location. This implies that a Protected Area may be part of the franchise agreement. However, the specific terms and conditions of the protected area are not detailed in this excerpt.
Paragraph 13.6(a) states that during the term of the Franchise Agreement, Azal Coffee will not operate or grant a franchise for a Store that is located within the Protected Area, which is defined as the real property on which the Franchise Location is located. However, this restriction does not apply to alternative distribution channels, such as sales to grocery stores, wholesale clubs, or online. Azal Coffee retains the right to operate or franchise other businesses that provide products and services similar to those of Azal Coffee Stores, even within the Protected Area, as long as they operate under a different brand or trade name.
Furthermore, the franchisor can operate or franchise a business providing similar products and services within the Protected Area if the business operates, franchises, or licenses competitive businesses in the Protected Area. This clause suggests that while there is a Protected Area, Azal Coffee retains considerable flexibility to operate or franchise competing businesses under certain conditions. A prospective franchisee should carefully review the specific definition of the Protected Area in their franchise agreement and understand the potential for competition from other businesses affiliated with Azal Coffee.