Before opening the Franchise Business, what must an Azal Coffee franchisee complete regarding the Franchise Location?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
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- Introduction. Franchisee has entered into a Franchise Agreement with Durar Investment, LLC ("Franchisor"). The Franchise Agreement requires Franchisee's lease for the Premises to contain certain provisions. In consideration of the agreement of Franchisor to enter into a Franchise Agreement with Franchisee for an Azal Coffee franchise to be located at the Premises, Landlord and Franchisee agree that the provisions contained in this Addendum will be applicable to the Lease notwithstanding anything to the contrary contained in the Lease.
- 2. Use. The Premises must not be used for any purpose other than the operation of an Azal Coffee during the term of the Lease, including renewals.
- 3. Franchisor's Options. Landlord and Franchisee grant to Franchisor the exclusive right, exercisable at the option of Franchisor, to be assigned all right, title and interest of Franchisee in and to the Lease and the Premises:
- a. on the expiration or termination of the Franchise Agreement. Franchisor must give written notice of its intent to exercise this option within thirty (30) days of the event triggering the option;
- b. on the expiration or termination of the Lease or on Franchisee's loss of its rights of possession to the Premises, whether by Franchisee's default under the Lease or otherwise. Landlord shall provide Franchisor notice of default as provided under Section 9 and Section 10. Franchisor shall exercise its right to accept assignment of the Lease within such periods; and
- c. on Franchisees abandonment of the Premises. For this purpose, abandonment will be conclusively presumed if Franchisee fails to have the business open and fully operational for two (2) consecutive days.
On the giving of notice of exercise by Franchisor under this Section, the Lease, and all right, title and interest of Franchisee under the lease and to the Premises will be automatically, and without need of further instrument, assigned to Franchisor. If Franchisor does not give notice of exercise within the applicable time period, Franchisor will be deemed to have forfeited all its rights under this Section. Landlord and Franchisee agree to execute documents confirming this assignment in the form presented by Franchisor, including a short form of Lease suitable for recording.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, before opening an Azal Coffee franchise, the franchisee's lease for the premises must contain specific provisions outlined in an addendum to the lease agreement. This addendum, agreed upon by the landlord and the franchisee, ensures that the premises are exclusively used for the operation of the Azal Coffee business during the lease term, including any renewals.
Furthermore, the franchisor, Durar Investment, LLC, retains certain options regarding the lease. Specifically, the franchisor has the exclusive right to be assigned all rights, title, and interest of the franchisee in the lease and the premises under certain conditions. These conditions include the expiration or termination of the Franchise Agreement, the expiration or termination of the lease, or the franchisee's abandonment of the premises. Abandonment is defined as failing to keep the business open and fully operational for two consecutive days.
In the event that the franchisor exercises its option to take over the lease, the lease and all rights, title, and interest of the franchisee are automatically assigned to the franchisor without the need for further documentation. The landlord and franchisee must execute documents confirming this assignment. However, if the franchisor does not provide notice of exercise within the specified time period, the franchisor forfeits its rights under this section. This ensures that Azal Coffee maintains control over the location and can continue operations even if the franchisee exits the business.