What happens to the Azal Coffee lease if the franchisee's possession rights are terminated?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
hise 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. 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.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, if a franchisee loses possession rights to their premises, Azal Coffee has the option to be assigned the lease. Specifically, the landlord must notify Azal Coffee of the franchisee's default, and Azal Coffee then has a period to exercise its right to accept the lease assignment. If Azal Coffee chooses to exercise this option, the franchisee's rights to the lease are automatically assigned to Azal Coffee without needing any further documentation. Azal Coffee must provide written notice within thirty days of the event triggering the option. If Azal Coffee does not exercise its option within the specified time, it forfeits its rights.
Upon assignment, 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 and is not obligated to cure any defaults before taking over the lease. Azal Coffee assumes all the franchisee's rights, options, and obligations under the lease from the assignment date and can transfer the lease to another Azal Coffee franchisee without the landlord's consent.
If Azal Coffee transfers the lease to another franchisee, Azal Coffee is then relieved of any further liability under the lease. The terms of the addendum to the lease remain in effect for the new franchisee. This arrangement protects Azal Coffee by allowing it to maintain control over the location and continue operations, while also ensuring that the original franchisee remains responsible for their prior obligations.