Is Azal Coffee obligated to cure any default under the lease if the franchisee fails to do so?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
ments 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. Franchisor's transfer to another Azal Coffee franchisee relieves Franchisor from any further liability under the Lease. The terms of this Addendum shall remain in full force and effect as to such franchisee-transferee.
- 5. Liability of Guarantors. The guaranty of any guarantors of the Lease will only apply to obligations arising during the initial term of the Lease.
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- Franchisor's Designated Architect and General Contractor. Franchisee is required to use Franchisor's designated architect and general contractor to design and construct the build-out of the Premises. Landlord agrees that Franchisor's designated architect and general contractor are approved to provide those services for the build-out at the Premises.
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- Franchisor Access. Landlord and Franchisee grant to Franchisor the right to enter the Premises to inspect and audit the Franchisee's business or to make any modifications necessary to protect the Franchisor trademarks.
- **8.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, Azal Coffee is not obligated to cure any default of the franchisee before taking assignment of the lease and possession of the premises. However, the landlord must give Azal Coffee written notice of any breach by the franchisee under the lease, and Azal Coffee will have 30 days from the date of that notice to cure the default on behalf of the franchisee before the landlord exercises any remedy it may have under the lease.
Azal Coffee has the option, but not the obligation, to cure any default if the franchisee fails to do so within the period the franchisee has to cure the default. After the franchisee's cure period expires, Azal Coffee then has 15 days to decide whether to cure the default. If Azal Coffee chooses to cure the franchisee's default, the landlord agrees to accept Azal Coffee's cure as if it were made timely by the franchisee.
This arrangement benefits the Azal Coffee franchisor by giving them control over the location. If a franchisee defaults, Azal Coffee has the option to step in, cure the default, and keep the location operational, potentially transferring it to another franchisee. This protects the brand and ensures business continuity. For the franchisee, it means that while Azal Coffee isn't automatically obligated to cover defaults, there's a chance they might, providing a safety net in certain situations. However, franchisees should not rely on this and must manage their business to avoid defaults.