What happens to the Azal Coffee lease if the Franchise Agreement expires without renewal?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- Use.** The Premises must not be used for any purpose other than the operation of an Azal Coffee during the term of the Lease, including renewals.
- 3. Franchisor's Options. Landlord and Franchisee grant to Franchisor the exclusive right, exercisable at the option of Franchisor, to be assigned all right, title and interest of Franchisee in and to the Lease and the Premises:
- a. on the expiration or termination of the Franchise Agreement. Franchisor must give written notice of its intent to exercise this option within thirty (30) days of the event triggering the option;
- b. on the expiration or termination of the Lease or on Franchisee's loss of its rights of possession to the Premises, whether by Franchisee's default under the Lease or otherwise. Landlord shall provide Franchisor notice of default as provided under Section 9 and Section 10. Franchisor shall exercise its right to accept assignment of the Lease within such periods; and
- c. on Franchisees abandonment of the Premises. For this purpose, abandonment will be conclusively presumed if Franchisee fails to have the business open and fully operational for two (2) consecutive days.
On the giving of notice of exercise by Franchisor under this Section, the Lease, and all right, title and interest of Franchisee under the lease and to the Premises will be automatically, and without need of further instrument, assigned to Franchisor. If Franchisor does not give notice of exercise within the applicable time period, Franchisor will be deemed to have forfeited all its rights under this Section. Landlord and Franchisee agree to execute documents confirming this assignment in the form presented by Franchisor, including a short form of Lease suitable for recording.
**4.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, if the Franchise Agreement expires without renewal, Azal Coffee has the option to be assigned the franchisee's rights, title, and interest in the lease and premises. Azal Coffee must provide written notice of its intent to exercise this option within 30 days of the Franchise Agreement's expiration. If Azal Coffee does not provide notice within the specified time, it forfeits its rights to the lease.
Upon notice of exercise by Azal Coffee, the lease and all rights, title, and interest of the franchisee under the lease are automatically assigned to Azal Coffee without any further documentation needed. Both the landlord and franchisee must execute documents confirming this assignment, including a short form of lease suitable for recording. This ensures Azal Coffee can continue operating a location even if the original franchisee's agreement ends.
If the current lease expires without renewal and the franchisee and landlord enter into a new lease arrangement, this new lease is considered the Lease for the purposes of the Collateral Assignment of Lease. This makes the collateral assignment fully applicable to the new lease. This clause protects Azal Coffee's interest in maintaining a location, even if the original lease terms change. The franchisee must also cease using all Intellectual Property, the Confidential Information, and the Franchise Systems.