Does Azal Coffee have requirements for the lease of the franchise location?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
-
- 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 Franchise Agreement requires that the franchisee's lease for the premises contain specific provisions. An addendum to the lease agreement between the landlord and franchisee outlines these provisions, ensuring they are applicable despite any conflicting terms in the original lease.
One key requirement is that the premises must be used solely for operating an Azal Coffee during the lease term, including any renewals. Additionally, the landlord and franchisee grant Azal Coffee the exclusive right to be assigned the lease under certain conditions. These conditions include the expiration or termination of the Franchise Agreement, the expiration or termination of the lease, the franchisee's loss of possession rights, or the franchisee's abandonment of the premises, which is presumed if the business is not fully operational for two consecutive days.
If any of these conditions occur, Azal Coffee has the option to take over the lease by providing written notice within a specified timeframe. If Azal Coffee exercises this option, the lease and all rights to the premises are automatically assigned to them. The landlord and franchisee must then execute documents confirming this assignment. This ensures that Azal Coffee can maintain control over the location and continue operating a franchise at that site, even if the original franchisee defaults or leaves the business.
These lease requirements are designed to protect Azal Coffee's interests and ensure the consistent operation of its franchises. Prospective franchisees should carefully review these provisions and understand the implications of the franchisor's rights regarding the lease agreement.