What are the potential consequences for an Azal Coffee franchisee who fails to comply with the franchisor's operational standards, considering the franchisor's right to conduct audits and inspections (Item 6) and the franchisee's obligations (Item 9)?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
, including attorneys' fees, incurred by us as a result of any Data Breach that is your responsibility.
We will have the right to engage a vendor to consult with and advise Azal Coffee franchisees on compliance with the PCI Requirements and Information Security Standards and to require you to pay a portion of the cost of the vendor's services as determined under our policies and procedures or to directly engage the vendor for these purposes. Also, we have the right to acquire a cyber insurance policy for the Azal Coffee franchise system and to require you to pay a portion of the cost of the cyber insurance policy as determined under our policies and procedures. We will have the
right to collect your share of the costs of the vendor and/or cyber insurance policy on a periodic basis in the manner provided in Section 4.13 of this Agreement.
8.13 Compliance with Laws and Other Obligations; Taxes.
You must obtain and keep in force every registration, charter, license, and permit required for the Franchise Business. In addition to all other references in this Agreement, you shall comply with all requirements of federal, state and local laws, rules, regulations, and orders related to the operation of your Store, including but not limited to obtaining the appropriate licenses and permits required by your local or state government and are required to operate the Store in compliance with the requirements of all federal, state, and local laws, rules, regulations, or ordinances that govern food preparation and service and Store sanitary conditions, the federal Clean Air Act and various implementing state laws require certain state and local areas to meet national air quality standards limiting emissions of ozone, carbon monoxide and particulate matters, including caps on emissions from commercial food preparation, all federal, state, and local laws, rules, regulations, and ordinances that govern your employment relationship with your employees, and other laws, rules and regulations that apply to business generally, such as the Americans With Disabilities Act, Fair Labor Standards Act, Family and Medical Leave Act, Affordable Care Act, Federal Wage and Hour Laws, Title VII of the Civil Rights Act, Age Discrimination in Employment Act, Affordable Care Act., Employee Retirement Income Security Act, and the Occupational Safety and Health Act, also apply to Stores, and comparable laws regulating minimum wage, overtime pay, recordkeeping, youth employment standards, and other aspects of employment), environmental regulation, and taxation.
You must pay, when due, all taxes of every kind applicable to the Franchise Business or the income of the Franchise Business, including all local, state, and federal taxes. We will not be responsible for any sales, use, service, occupation, excise, gross receipts, income, property, or other taxes, whether levied on you or the Franchise Business, due to the business you conduct (except for our income taxes).
What This Means (2024 FDD)
According to the 2024 Azal Coffee Franchise Disclosure Document, franchisees face several potential consequences for failing to comply with the franchisor's operational standards. Azal Coffee requires franchisees to operate their stores in compliance with all federal, state, and local laws, rules, regulations, and orders. This includes obtaining and maintaining all necessary registrations, charters, licenses, and permits. Compliance extends to laws governing food preparation and service, sanitary conditions, employment relationships, environmental regulations, and taxation.
Failure to comply with these standards can lead to various repercussions. The franchisor has the right to engage a vendor to consult with franchisees on compliance with PCI Requirements and Information Security Standards, with the franchisee potentially required to pay a portion of the vendor's services. Azal Coffee also has the right to acquire a cyber insurance policy for the franchise system, and franchisees may be required to contribute to the cost of this policy. Non-compliance can also affect a franchisee's option to renew their franchise agreement for additional terms. To renew for two additional five-year periods, franchisees must not be in default under the Franchise Agreement or any other agreement with Azal Coffee or its affiliates.
Furthermore, non-compliance can trigger the franchisor's right to assume the franchisee's lease. If a franchisee abandons the premises, defined as failing to operate the business for two consecutive days, Azal Coffee has the option to take over the lease. The franchisor also has the right to be assigned the lease upon the expiration or termination of the Franchise Agreement or the franchisee's loss of possession of the premises due to default. This gives Azal Coffee significant control over the location of the franchise and ensures continued operation under the brand's standards.
In cases where a franchisee's actions cause irreparable harm to Azal Coffee, the franchisor is entitled to seek an injunction to stop the franchisee from continuing the violation or breach of the agreement. Additionally, the franchisee may be responsible for covering all costs and expenses, including actual attorneys' fees and costs, incurred by Azal Coffee in enforcing the agreement. These remedies are cumulative, meaning Azal Coffee can pursue multiple avenues of recourse simultaneously, as outlined in the agreement and available under law or equity.