What individuals affiliated with an Azal Coffee franchisee are prohibited from diverting business to a competing business?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
You and your shareholders, officers, directors, partners, members, managers, owners and investors, Family Members, and affiliates, must not, during the term of this Agreement and for a period of three (3) years after termination, expiration, or non-renewal of this Agreement, directly or indirectly: (a) divert or attempt to divert any business or customer of the Franchise Business or any other Store to any Competing Business by direct or indirect inducements or otherwise; (b) sponsor, appoint or encourage or influence or promote friends, relatives or associates to operate a Competing Business; or (c) employ any person or furnish of permit access to our Confidential Information to any person who is engaged or has arranged to become engaged in any activity in competition with Azal Coffees, including involvement, either as an owner (except no more than one percent (1%) of the publicly traded securities of an entity), member, manager, partner, director, officer, employee, consultant, lender, representative or agent, or in any other capacity, of any business that is involved, in whole or in part, in a Competing Business or in any business or entity that franchises, licenses or otherwise grants to others the right to operate a Competing Business.
13.4 Definitions of Competing Business, Geographic Areas, and Family Members. The following definitions will apply to this Agreement:
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, several individuals and entities affiliated with a franchisee are prohibited from diverting business to a competing business during the term of the Franchise Agreement and for three years after its termination, expiration, or non-renewal. These include the Franchisee Parties themselves, along with their shareholders, officers, directors, members, managers, partners, owners, and investors. The restrictions also extend to Family Members and affiliates of the Franchisee Parties. This broad scope aims to prevent any direct or indirect attempts to take away business or customers from the Azal Coffee franchise.
The term "Family Members" is specifically defined to include spouses, children, grandchildren, stepchildren, parents, siblings, spouse's parents, and spouse's siblings of the franchisee or any of their shareholders, officers, directors, partners, managers, members, owners, investors, and affiliates. This definition ensures that close relatives cannot be used as a loophole to circumvent the non-compete obligations.
The agreement specifies that these individuals and entities must not divert or attempt to divert business, sponsor or encourage others to operate a competing business, or employ anyone involved in a competing business. The definition of "Competing Business" includes any business that competes with Azal Coffee Stores by selling similar products such as coffee beverages, baked goods, food products, coffee beans, or coffee accessories. This comprehensive restriction is designed to protect Azal Coffee's market share and the interests of its franchisees by preventing unfair competition from those closely associated with the franchise system.