What happens to all sums and debts owing to Azal Coffee and its affiliates upon termination or expiration?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
Until all payments are made and any damages, costs, and expenses incurred or suffered by us have been paid, we shall have, and you shall be deemed to have granted, a lien against any and all of the furnishings, fixtures, and equipment, and all other assets of the Franchise Business, and your interest in the Lease and the Location.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, upon the termination or expiration of the Franchise Agreement, all payments and debts owed to Azal Coffee and its affiliates must be settled. Azal Coffee has a lien against the furnishings, fixtures, equipment, and all other assets of the franchise business, including the franchisee's interest in the lease and location, until all payments, damages, costs, and expenses are paid.
This means that if an Azal Coffee franchise is terminated or expires, the franchisee is obligated to pay all outstanding amounts to Azal Coffee. This includes not only typical payments like royalties, advertising fees, and amounts for products or services, but also any other amounts owed, such as late charges, interest, and even litigation expenses if applicable. The franchisee cannot withhold these payments based on any claims against Azal Coffee, and Azal Coffee can apply any payments received first to cover any outstanding late charges or interest.
Azal Coffee's right to exercise remedies following termination or expiration, including enforcing provisions, does not affect any other rights or remedies they may have for breach of the agreement. These remedies can include actions for specific enforcement, injunctive relief, or damages caused by the breach. The lien on the franchise's assets provides Azal Coffee with security to ensure that all outstanding debts and obligations are fulfilled before the franchisee can fully exit the system.
This is a fairly standard practice in franchising, as franchisors typically want to ensure that all financial obligations are settled before a franchisee exits the system. Prospective Azal Coffee franchisees should be aware of this provision and understand that they will be responsible for settling all outstanding debts upon termination or expiration of their franchise agreement, and that Azal Coffee has a secured interest in the franchise's assets until those debts are paid.