Does Azal Coffee have an option to assume the lease upon termination of the franchise agreement?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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.
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.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, Azal Coffee has the option to assume the lease under certain conditions. Specifically, upon the expiration or termination of the Franchise Agreement, Azal Coffee has the right to be assigned all of the franchisee's rights, title, and interest in the lease and the premises. To exercise this option, Azal Coffee must provide written notice of its intent within thirty days of the event that triggers the option.
Additionally, Azal Coffee can exercise this right upon the expiration or termination of the lease, or if the franchisee loses possession of the premises due to default or other reasons. In the event of abandonment of the premises, which is presumed if the business is not fully operational for two consecutive days, Azal Coffee also has the option to assume the lease. If Azal Coffee exercises its option, the lease automatically transfers to them without needing additional documentation, although both parties agree to execute documents confirming the assignment.
If Azal Coffee chooses not to exercise its option within the specified time, it forfeits its rights. Furthermore, if Azal Coffee exercises its option to accept the lease assignment, the franchisee remains liable for any outstanding amounts or defaults that occurred before the assignment's effective date. Azal Coffee is not liable for the franchisee's debts or defaults before taking over the lease. Azal Coffee succeeds to all the franchisee's rights, options, and obligations under the lease from the effective date of the assignment and can transfer or assign the lease to another Azal Coffee franchisee without needing the landlord's consent. Transferring the lease to another franchisee relieves Azal Coffee of further liability under the lease, and the terms of the addendum remain in effect for the new franchisee.