Does the Azal Coffee franchise agreement state that the restrictions are reasonable, including their term and geographic scope?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
You acknowledge and agree that the length of the post-term restrictions and the geographical restrictions contained in this Article 13 are fair and reasonable and that we have attempted to limit your right to compete only to the extent necessary to protect the reasonable competitive business interests of us and our franchisees and licensees. If the above restrictions or any part of these restrictions are found to be invalid, this Article 13 will be considered as imposing the maximum restrictions allowed under the applicable state law in place of the invalid restriction or part of the restriction. In addition, we reserve the right to reduce the scope of these provisions without your consent, at any time, effective immediately on notice to you.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the franchise agreement includes an acknowledgement from the franchisee that the post-term and geographical restrictions are considered fair and reasonable. Azal Coffee states that they have limited the right to compete only to the extent necessary to protect the competitive business interests of Azal Coffee and its franchisees and licensees.
The agreement specifies that if any of the restrictions are found to be invalid, the agreement will be interpreted to impose the maximum restrictions allowed under applicable state law. Azal Coffee also retains the right to reduce the scope of these restrictions at any time with immediate effect upon notice to the franchisee.
During the term of the agreement and for three years after termination, expiration, or non-renewal, the franchisee is restricted from engaging in activities that could divert business from Azal Coffee or any other store to a competing business. This includes soliciting customers, encouraging others to operate a competing business, or employing individuals who are involved in competitive activities. The definition of "Competing Business" includes businesses that sell similar coffee beverages, baked goods, food products, coffee beans, or coffee accessories. The "Geographic Areas" include the Franchise Location and the areas within twenty-five (25) miles of the Franchise Location, and the areas within twenty-five (25) miles of any other Azal Coffee Store existing or in development at the time you cease to operate the Competing Business.