What is the general rule regarding transfers under the Azal Coffee franchise agreement?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- (i) You or the proposed transferee must take any action specified by us to make the Franchise Business comply with current appearance, Franchise Trade Dress, equipment, and signage requirements. We may require this action to be taken before the Transfer or within a specified period of time after the Transfer.
- (j) The proposed transferee and its owners, shareholders, officers, directors, partners, members, investors, employees and agents, and their Family Members and affiliates of the proposed transferee must not be an owner, shareholder, officer, director, partner, member, investor, employee, agent or consultant of or to a business that competes with Azal Coffee. On our request, the transferee may be required to sign an acknowledgement of compliance with this prohibition.
- (k) If the transfer involves installment payments by the transferee to the Seller, the Seller must sign a subordination agreement under which the Seller subordinates its right to receive any installment from the transferee to our right to receive all amounts due to us through the due date of the installment. The subordination agreement must be in a format and contain terms and conditions specified by us.
- (I) Your landlord must allow the lease for the Franchise Location to be transferred to the transferee.
- (m) You, the Seller, and the proposed transferee must comply with any other standard procedures specified by us.
You acknowledge that the conditions listed above are necessary for protection of the Franchise Marks and Franchise Systems and do not impose unreasonable restrictions on a Transfer.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, a franchisee wishing to transfer their franchise must adhere to several conditions to protect the Franchise Marks and Systems. These conditions include ensuring the business complies with current appearance, trade dress, equipment, and signage requirements, potentially before or after the transfer.
Furthermore, the prospective transferee and related parties must not be involved with any business that competes with Azal Coffee. The transferee might need to sign an acknowledgement confirming compliance with this restriction. If the transfer involves installment payments from the transferee to the seller, the seller must sign a subordination agreement, giving Azal Coffee priority in receiving any amounts due.
Additionally, the franchisee's landlord must permit the lease for the franchise location to be transferred to the new transferee. Both the seller and the proposed transferee must also comply with any other standard procedures that Azal Coffee specifies. The Azal Coffee franchise agreement states that these conditions are deemed necessary to protect the franchise's trademarks and systems and are not considered unreasonable restrictions on the transfer.