What is the relationship between the 'right of first refusal' and the Azal Coffee Franchise Agreement?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
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- Introduction. Franchisee has entered into a Franchise Agreement with Durar Investment, LLC ("Franchisor"). The Franchise Agreement requires Franchisee's lease for the Premises to contain certain provisions. In consideration of the agreement of Franchisor to enter into a Franchise Agreement with Franchisee for an Azal Coffee franchise to be located at the Premises, Landlord and Franchisee agree that the provisions contained in this Addendum will be applicable to the Lease notwithstanding anything to the contrary contained in the Lease.
- 2. Use. The Premises must not be used for any purpose other than the operation of an Azal Coffee during the term of the Lease, including renewals.
- 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.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the franchisor, Durar Investment, LLC, retains specific rights regarding the lease of the premises where the Azal Coffee franchise operates. The landlord and franchisee grant Azal Coffee the exclusive right to be assigned the lease.
This right can be exercised under certain conditions: upon the expiration or termination of the Franchise Agreement, the expiration or termination of the lease, or the franchisee's loss of possession of the premises. Azal Coffee must provide written notice of its intent to exercise this option within thirty days of the event that triggers the option. If the franchisee abandons the premises, which is presumed if the business is not fully operational for two consecutive days, Azal Coffee can also exercise its right to the lease.
If Azal Coffee decides to exercise its option, the lease and all rights to the premises are automatically assigned to them without needing further documentation. However, if Azal Coffee does not provide notice within the specified time, it forfeits its rights. Both the landlord and franchisee must sign documents confirming this assignment if requested by Azal Coffee. This clause ensures that Azal Coffee has the ability to maintain control over the location of the franchise, which is critical for maintaining brand consistency and operational standards.