What is the Azal Coffee policy regarding the transferee or their affiliates being involved with competing businesses?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- (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.
13.3 Other Restrictions.
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.
13.4 Definitions of Competing Business, Geographic Areas, and Family Members. The following definitions will apply to this Agreement:
- (a) "Competing Business" means any business that competes with the Stores and/or is the same or similar to an Azal Coffee Store, including but not limited to a business that sells the same or similar coffee beverages, baked goods, food products, coffee beans, or coffee accessories for dine-in, carry-out, catering, or delivery or other products that may be offered by Azal Coffee Stores now or in the future.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, a proposed transferee and their related parties must not be involved with any business that competes with Azal Coffee. This restriction extends to the transferee's owners, shareholders, officers, directors, partners, members, investors, employees, agents, their family members, and affiliates. These individuals are prohibited from holding positions such as owner, shareholder, officer, director, partner, member, investor, employee, agent, or consultant in a competing business. Azal Coffee may require the transferee to sign an acknowledgement confirming compliance with this policy.
Furthermore, the Azal Coffee Franchise Agreement states that during the term of the agreement and for three years after its termination, expiration, or non-renewal, franchisees and their related parties are restricted from engaging in activities that could divert business from Azal Coffee to a competing business. This includes soliciting Azal Coffee's customers, encouraging others to operate a competing business, or employing individuals who are involved in competitive activities. The definition of a 'Competing Business' includes any business that is the same or similar to an Azal Coffee store, including those selling similar coffee beverages, baked goods, food products, coffee beans, or coffee accessories.
These restrictions aim to protect Azal Coffee's market position and confidential information. The agreement specifies that involvement in a competing business is prohibited, whether as an owner, member, manager, partner, director, officer, employee, consultant, lender, representative, or agent. However, a limited exception exists, allowing ownership of no more than one percent of the publicly traded securities of an entity involved in a competing business. These measures ensure that franchisees and transferees remain committed to the Azal Coffee system and do not use their knowledge or resources to benefit competing ventures, safeguarding the brand's interests and the broader franchise network.