Is an Azal Coffee franchisee prohibited from being a consultant to a Competing Business during the term of the agreement?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
You and your shareholders, officers, directors, partners, members, managers, owners and investors, Family Members, and affiliates, must not, during the term of this Agreement and for a period of three (3) years after termination, expiration, or non-renewal of this Agreement, 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 of permit access to our Confidential Information to any person who is engaged or has arranged to become engaged in any activity in competition with Azal Coffees, including involvement, either as an owner (except no more than one percent (1%) of the publicly traded securities of an entity), member, manager, partner, director, officer, 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, franchisees and related parties are restricted from involvement with competing businesses during the franchise term and for three years afterward. This restriction includes acting as a consultant for a competing business. Specifically, the franchisee, their shareholders, officers, directors, members, managers, partners, owners, investors, family members, and affiliates are all subject to this restriction.
This non-compete clause prevents franchisees from diverting business or customers to competing businesses, sponsoring or promoting competing businesses, or employing individuals involved in competitive activities. The definition of a "Competing Business" includes any business that competes with Azal Coffee Stores by selling similar products such as coffee beverages, baked goods, food products, coffee beans, or coffee accessories.
The restrictions extend not only to direct involvement but also to indirect involvement, such as furnishing confidential information to individuals engaged in competitive activities. The agreement specifies that violating these restrictions after the termination of the franchise agreement will extend the prohibition period until three years after the cessation of the violating activities. This comprehensive non-compete agreement is designed to protect Azal Coffee's market position and confidential information.