In Illinois, when is the Azal Coffee franchisee's payment of the initial franchisee fee deferred until?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- Item 5 of the Franchise Disclosure Document is amended to add the following:
Franchisee's payment of the initial franchisee fee will be deferred until Franchisor has met all of its initial obligations to Franchisee, and Franchisee has commenced doing business. This financial assurance requirement was imposed by the Office of the Attorney General due to Franchisor's financial condition.
Source: Item 23 — RECEIPTS (FDD pages 51–204)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, for franchisees in Illinois, the payment of the initial franchise fee is deferred. This means that the franchisee does not have to pay the fee upfront. Instead, the payment is delayed until certain conditions are met.
The payment is deferred until Azal Coffee has fulfilled all of its initial obligations to the franchisee. These obligations would typically include providing training, site selection assistance, and other support necessary to get the franchise location up and running. Additionally, the payment is deferred until the franchisee has actually commenced doing business, meaning the Azal Coffee store is open and serving customers.
This financial assurance requirement was specifically imposed by the Illinois Office of the Attorney General due to Azal Coffee's financial condition. This suggests that the Attorney General's office has concerns about the financial stability of Azal Coffee and wants to protect franchisees by ensuring that they only pay the initial franchise fee once the franchisor has delivered on its promises and the business is operational. This amendment is specific to Illinois and amends Section 4.1 of the Franchise Agreement.