Can an Azal Coffee franchisee seek a transfer or change in venue?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
ee agree to execute documents confirming this assignment in the form presented by Franchisor, including a short form of Lease suitable for recording.
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. Franchisor shall not be liable for any amounts owing by Franchisee and shall have no obligation to cure any default of franchisee before taking assignment of the Lease and possession of the Premises. Franchisor shall succeed to all of the Franchisee's rights, options, and obligations under the Lease commencing on the effective date of the assignment and shall have the right to transfer or assign the Lease to another Azal Coffee franchisee without the need to seek consent form Landlord. Franchisor's transfer to another Azal Coffee franchisee relieves Franchisor from any further liability under the Lease. The terms of this Addendum shall remain in full force and effect as to such franchisee-transferee.
- 5. Liability of Guarantors. The guaranty of any guarantors of the Lease will only apply to obligations arising during the initial term of the Lease.
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- Franchisor's Designated Architect and General Contractor. Franchisee is required to use Franchisor's designated architect and general contractor to design and construct the build-out of the Premises. Landlord agrees that Franchisor's designated architect and general contractor are approved to provide those services for the build-out at the Premises.
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- Franchisor Access. Landlord and Franchisee grant to Franchisor the right to enter the Premises to inspect and audit the Franchisee's business or to make any modifications necessary to protect the Franchisor trademarks.
- 8. Exclusivity. If the Premises are part of a strip mall, shopping center or similar location, Landlord will not lease any other space in the mall or center to any business that sells coffee beverages, coffee beans, coffee accessories, or similar food or baked goods for dine-in, carry-out, catering, or delivery.
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- Notice of Default and Right to Cure. Landlord must give Franchisor written notice of any breach by Franchisee under the Lease and Franchisor will have thirty (30) days from the date of that notice to cure that default on behalf of Franchisee before Landlord exercises any remedy it may have under the Lease.
10. Other Notices.
- (a) Landlord and Franchisee must give Franchisor 30 days prior written notice of: (i) the cancellation or termination of the Lease prior to the expiration date of the lease; (ii) an assignment or attempted assignment of the Lease by the Landlord or Franchisee;
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the franchisor has specific rights regarding the lease of the premises. If Azal Coffee exercises its option to accept assignment of the lease, the franchisee remains liable for any outstanding amounts or defaults that occurred before the assignment's effective date. However, Azal Coffee is not liable for the franchisee's debts or defaults before taking assignment of the lease.
Azal Coffee has the right to transfer or assign the lease to another Azal Coffee franchisee without needing the landlord's consent. This transfer releases Azal Coffee from further liability under the lease, and the terms of the lease addendum remain in effect for the new franchisee. This clause primarily concerns the franchisor's ability to manage the location and ensure continued operation under the Azal Coffee brand, even if the original franchisee defaults or leaves the system.
Furthermore, the document outlines the conditions under which Azal Coffee can take control of the lease, such as upon the expiration or termination of the Franchise Agreement or the lease, or if the franchisee abandons the premises. Abandonment is presumed if the business is not fully operational for two consecutive days. In such cases, the lease is automatically assigned to Azal Coffee, allowing them to maintain control over the location and potentially transfer it to another franchisee. This protects the brand's presence and operational continuity.