What are the Franchisee Parties agreeing to refrain from doing in the Confidentiality and Nondisclosure Agreement and Covenant Not to Compete for Azal Coffee?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
censes, or otherwise grants to others the right to operate a Competing Business; provided that, the restrictions in this Section will only apply within the Geographic Areas.
- c) The Franchisee Parties and their shareholders, officers, directors, members, managers, partners, owners, and investors, Family Members, and affiliates, must not, during the term of the Franchise Agreement and for a period of three (3) years after termination, expiration, non-renewal, or any other end of the Franchise Agreement, for any reason whatsoever, directly or indirectly: (a) divert or attempt to divert any business or customer of the Franchise Business or any other Store to any Competing Business by direct or indirect inducements or otherwise; (b) sponsor, appoint, or encourage or influence or promote friends, relatives, or associates to operate a Competing Business; or (c) employ any person or furnish or permit access to the Information to any person who is engaged or has arranged to become engaged in any activity in competition with Azal Coffee Stores, including involvement, either as an owner (except no more than one percent (1%) of the publicly traded securities of an entity), partner, director, officer, member, manager, employee, consultant, lender, representative, or agent, or in any other capacity, of any business that is involved, in whole or in part, in a Competing Business or in any business
- or entity that franchises, licenses, or otherwise grants to others the right to operate a Competing Business.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the Franchisee Parties, including their shareholders, officers, directors, members, managers, partners, owners, investors, family members, and affiliates, agree to several restrictions during the term of the Franchise Agreement and for three years after its termination, expiration, non-renewal, or any other end.
Specifically, the Franchisee Parties must not directly or indirectly divert or attempt to divert any business or customer of the Franchise Business or any other Azal Coffee store to any Competing Business through inducements or other means. They also agree not to sponsor, appoint, encourage, influence, or promote friends, relatives, or associates to operate a Competing Business. Furthermore, they are prohibited from employing any person or providing access to confidential information to anyone engaged in competition with Azal Coffee stores. This includes involvement as an owner (with an exception for holding no more than 1% of publicly traded securities), partner, director, officer, member, manager, employee, consultant, lender, representative, or agent in any business involved in a Competing Business or any entity that franchises, licenses, or grants others the right to operate a Competing Business.
The agreement also stipulates that if any Franchisee Party violates these provisions regarding the operation of a Competing Business after the Franchise Agreement ends, the prohibition period will be extended until three years after the cessation of all violating activities. These restrictions are designed to protect Azal Coffee's business interests and prevent franchisees from using confidential information or relationships to unfairly compete with the franchise system.