What options does Azal Coffee have regarding the franchise agreement that the proposed transferee must sign?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
t we sign a consent to the proposed Transfer. The transfer fee is not refundable.
- (i) You or the proposed transferee must take any action specified by us to make the Franchise Business comply with current appearance, Franchise Trade Dress, equipment, and signage requirements. We may require this action to be taken before the Transfer or within a specified period of time after the Transfer.
- (j) The proposed transferee and its owners, shareholders, officers, directors, partners, members, investors, employees and agents, and their Family Members and affiliates of the proposed transferee must not be an owner, shareholder, officer, director, partner, member, investor, employee, agent or consultant of or to a business that competes with Azal Coffee. On our request, the transferee may be required to sign an acknowledgement of compliance with this prohibition.
- (k) If the transfer involves installment payments by the transferee to the Seller, the Seller must sign a subordination agreement under which the Seller subordinates its right to receive any installment from the transferee to our right to receive all amounts due to us through the due date of the installment. The subordination agreement must be in a format and contain terms and conditions specified by us.
- (I) Your landlord must allow the lease for the Franchise Location to be transferred to the transferee.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, in the event of a franchise transfer, Azal Coffee has several stipulations regarding agreements and actions that the proposed transferee must adhere to.
First, Azal Coffee can require the proposed transferee to take actions to ensure the franchise business complies with current standards for appearance, trade dress, equipment, and signage. These actions may be required before or after the transfer. Azal Coffee also mandates that the transferee and related parties not be involved with any business that competes with Azal Coffee. The transferee may be required to sign an acknowledgement confirming compliance with this non-compete provision.
Additionally, if the transfer involves installment payments from the transferee to the seller, the seller must sign a subordination agreement. This agreement ensures that Azal Coffee's right to receive any amounts due takes precedence over the seller's right to receive installment payments from the transferee. The subordination agreement must be in a format and contain terms and conditions specified by Azal Coffee.
These conditions are in place to protect Azal Coffee's franchise marks and system, and the company maintains that they do not impose unreasonable restrictions on the transfer. These stipulations ensure that the brand standards are upheld and that the new franchisee is committed to the Azal Coffee system.