Who is required to sign Appendix I, 'Confidentiality and Non-Disclosure Agreement and Covenant Not to Compete,' for an Azal Coffee franchise?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
WHEREAS, Confidential Information and Trade Secrets, which are more particularly described below, will be disclosed to the Franchisee Parties in relation to Franchisee's operation of its Azal Coffee Store franchise; and
WHEREAS, the Franchisee Parties understand the necessity of not disclosing any such information to any other party or using such information to compete against the Company, any affiliate(s) or other franchisee(s) of the Company, or in any business (i) that is a Competing Business (as defined below) or (ii) in which Trade Secrets and other Confidential Information (as defined below) could be used to the disadvantage of Franchisee, or the Company, any affiliate(s) of the Company, or the Company's other franchisees.
NOW, THEREFORE, in order to induce the Company to transmit the aforesaid information to the Franchisee Parties, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby agree as follows:
- c) The Franchisee Parties and their shareholders, officers, directors, members, managers, partners, owners, and investors, Family Members, and affiliates, must not, during the term of the Franchise Agreement and for a period of three (3) years after termination, expiration, non-renewal, or any other end of the Franchise Agreement, for any reason whatsoever, 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 or permit access to the Information to any person who is engaged or has arranged to become engaged in any activity in competition with Azal Coffee Stores, including involvement, either as an owner (except no more than one percent (1%) of the publicly traded securities of an entity), partner, director, officer, member, manager, 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
- d) The term "Family Members" shall mean all individuals with any of the following relationships with a Franchisee Party or any of their respective shareholders, officers, directors, partners, members, managers, owners, investors, and affiliates: (i) spouse; (ii) children; (iii) grandchildren; (iv) stepchildren; (v) parents; (vi) siblings; (vii) spouse's parents; and (viii) spouse's siblings.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
Based on the 2024 Azal Coffee Franchise Disclosure Document, the 'Confidentiality and Non-Disclosure Agreement and Covenant Not to Compete' (referred to as Appendix I) must be signed by the 'Franchisee Parties'. The FDD specifies that this agreement aims to protect Azal Coffee's confidential information and trade secrets, which will be disclosed to the Franchisee Parties during the operation of their Azal Coffee Store franchise. The agreement ensures that this information is not disclosed to third parties or used to compete against Azal Coffee.
The term 'Franchisee Parties' includes not only the franchisee themselves but also extends to their shareholders, officers, directors, members, managers, partners, owners, and investors. Furthermore, it encompasses Family Members and affiliates, indicating a broad scope of individuals and entities bound by the confidentiality and non-compete obligations. 'Family Members' are defined as individuals with specific relationships to the franchisee or their associated parties, including spouses, children, grandchildren, stepchildren, parents, siblings, spouse's parents, and spouse's siblings.
This requirement has significant implications for prospective Azal Coffee franchisees. It means that a wide range of individuals connected to the franchise, both directly and indirectly, are legally obligated to maintain confidentiality and avoid competitive activities. Franchisees should ensure that all relevant parties are fully aware of and understand the terms of this agreement, as violations could lead to legal repercussions. This is a common practice in franchising to protect the franchisor's business model and proprietary information.