Which provisions of the Azal Coffee Franchise Agreement survive termination due to unmet contingencies?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
| THIS ADDENDUM is made the day of, 20, and modifies a |
|---|
| Franchise Agreement of the same date (the "Franchise Agreement") entered into by Durar Investment, LLC, a Michigan limited liability company, ("Franchisor") and |
| , a(" Franchisee "). In this |
| , a |
| A. Introduction . You entered into an agreement ("Purchase Agreement") for the |
| purchase of the Azal Coffee located at ("Store") from the current owner of the Store (the "Seller"). We and you |
| desire to amend the Franchise Agreement to reflect the fact that you are acquiring an open and |
| operating Store by transfer from one of our existing franchisees. All capitalized terms not otherwise |
| defined in this Addendum will have the same meaning as in the Franchise Agreement. |
| B. Contingency ; Date of Effectiveness of Franchise Agreement . The rights and |
| obligations of the parties under the Franchise Agreement are contingent on: (1) your completion of |
| our initial training program; and (2) the closing of the transaction under the Purchase Agreement and the transfer of possession and ownership of the Store to you. If these contingencies are not |
| met by, 20, we may, at our option, terminate the Franchise Agreement. If |
| we terminate the Franchise Agreement as provided in this Section, we will have the right to retain |
| the transfer fee paid by you (or the Seller) and otherwise the parties will have no further rights or |
| obligations to each other under the Franchise Agreement; provided that, the confidentiality and |
| non-competition provisions of the Franchise Agreement will survive the termination. If these |
| contingencies are met by the date specified above in this Section, then the Franchise Agreement |
| will become effective on the date that you receive possession and ownership of the Store (the "Effective Date"). |
| Ellective Date ). |
| C. R |
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, in the event that the Franchise Agreement is terminated due to unmet contingencies, the confidentiality and non-competition provisions of the agreement will remain in effect. These contingencies include the franchisee's completion of the initial training program and the closing of the transaction under the Purchase Agreement, which involves the transfer of possession and ownership of the store to the franchisee. If these conditions are not met by a specified date, Azal Coffee has the option to terminate the Franchise Agreement.
This means that even if the agreement is terminated early due to these unmet conditions, the franchisee is still obligated to maintain the confidentiality of proprietary information and adhere to the non-competition terms. The franchisor retains the right to keep the transfer fee paid by the franchisee (or the seller). This ensures that Azal Coffee's business interests are protected, even if the franchise does not proceed as planned.
The non-competition clause restricts the franchisee from engaging in any competing business activities during the term of the Franchise Agreement and for a period of three years after its termination. This includes diverting business or customers, sponsoring competing businesses, or employing individuals involved in competing activities. These restrictions are designed to protect Azal Coffee's market position and prevent franchisees from using the franchisor's confidential information and business model to compete against them, even after the franchise relationship ends.