Does the Azal Coffee franchisee's indemnity obligation end with the expiration, transfer, or termination of the franchise agreement?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
If this Agreement expires or terminates for any reason (including termination on a transfer), your rights to use the Intellectual Property and the Franchise Systems and all other rights associated with being an authorized Azal Coffee franchisee will cease and you must do the following:
- (a) You must immediately and permanently discontinue the use of the Intellectual Property, the Confidential Information, the Franchise Systems, and any trademarks, names, and logos confusingly similar to the Marks or Trade Dress, and any other materials that may, in any way, indicate that you are or were an Azal Coffee franchisee, or in any way associated with us.
- (b) You must immediately discontinue all advertising placed or ordered. You must remove and deliver to us all sign faces, advertising and promotional material, letterhead, forms, and any other items containing the Intellectual Property or the Confidential Information. You are responsible for the cost of sign and other identification removal and the cost of shipping signs and other materials to us. If you remain in possession of the Franchise Location, you must alter the premises to distinguish the premises from the appearance of a Store.
- (c) You must cease using the Brand Standards Manual, the Confidential Information, and all other proprietary business information provided by us and must return to us all copies of the Brand Standards Manual, the Confidential Information, and other bulletins or other materials received from us containing information about the Intellectual Property and Stores.
- (d) You must immediately and permanently cease to use all telephone and fax numbers, email addresses, website addresses, domain names and other electronic media that have been used in the Franchise Business (the "Telephone Numbers" and "Electronic Media") and if requested by us, must assign some or all of these Telephone Numbers and Electronic Media to us. You acknowledge that as between you and us, we have the sole right to all Telephone Numbers and Electronic Media used in the Franchise Business and all written and online directory listings associated with the Franchise Business. You authorize us, and appoint us and any of our officers as your attorney-in-fact, to direct the applicable service providers and all listing agencies to transfer those items to us or our agent or assignee if you fail or refuse to do so. You authorize the applicable service providers and all listing agencies to accept the direction in this Agreement as conclusive evidence of our exclusive rights in the Telephone Numbers and Electronic Media and directory listings and our authority to direct their transfer.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
Based on the 2024 Azal Coffee Franchise Disclosure Document, the franchisee's obligations do not necessarily end with the expiration, transfer, or termination of the franchise agreement. Specifically, upon expiration or termination of the agreement, the franchisee must immediately discontinue using Azal Coffee's intellectual property, confidential information, and franchise systems. This includes ceasing all advertising, removing signs and promotional materials, and returning the Brand Standards Manual and other proprietary information. These obligations extend even if the termination occurs due to a transfer of the franchise.
Moreover, the franchisee and related parties are restricted from engaging in any competing business during the term of the Franchise Agreement and for three years after its termination, expiration, non-renewal, or any other end. This includes diverting business or customers, sponsoring competing businesses, or employing individuals involved in competitive activities. If a franchisee violates these non-compete provisions after the agreement ends, the prohibition period is extended until three years after the cessation of the violating activities.
In the event of a transfer of the franchise, the franchisee is required to release Azal Coffee from all liabilities and claims, known or unknown, that existed up to the date of the agreement. However, this release does not affect the franchisee's ongoing rights and obligations under the agreement. Additionally, Azal Coffee retains a lien against the assets of the franchise business until all payments and any incurred damages, costs, and expenses are fully paid. This security provision ensures that Azal Coffee can recover any outstanding amounts owed by the franchisee, even after the termination or expiration of the franchise agreement.