What individuals and entities affiliated with the franchisee are subject to the post-term non-compete obligations under the Azal Coffee franchise agreement?
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.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the post-term non-compete obligations apply not only to the franchisee but also to a range of affiliated individuals and entities. These include the franchisee's shareholders, officers, directors, partners, members, managers, owners, and investors. The restrictions also extend to the franchisee's Family Members and affiliates. This broad scope is designed to prevent individuals closely associated with the franchisee from circumventing the non-compete agreement.
The non-compete obligations are in effect during the term of the Franchise Agreement and for a period of three years after the agreement's termination, expiration, or non-renewal. During this period, these individuals and entities are prohibited from engaging in activities that could divert business from Azal Coffee or promote a competing business. This includes directly or indirectly diverting business or customers, sponsoring or encouraging others to operate a competing business, and employing or providing confidential information to anyone involved in a competing business.
The definition of "Family Members" is extensive, encompassing spouses, children, grandchildren, stepchildren, parents, siblings, spouse's parents, and spouse's siblings. This ensures that close relatives with potential influence over the franchisee's business decisions are also bound by the non-compete obligations. The agreement specifies that involvement in a competing business includes any role, such as owner (with a minor exception for publicly traded securities), partner, director, officer, employee, consultant, lender, representative, or agent. This comprehensive approach aims to protect Azal Coffee's market position and confidential information by preventing a wide range of individuals and entities with ties to the franchisee from engaging in competitive activities within the specified timeframe and geographic area.