What standard procedures must the seller and proposed transferee comply with as specified by Azal Coffee during a transfer?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- (i) You or the proposed transferee must take any action specified by us to make the Franchise Business comply with current appearance, Franchise Trade Dress, equipment, and signage requirements. We may require this action to be taken before the Transfer or within a specified period of time after the Transfer.
- (j) The proposed transferee and its owners, shareholders, officers, directors, partners, members, investors, employees and agents, and their Family Members and affiliates of the proposed transferee must not be an owner, shareholder, officer, director, partner, member, investor, employee, agent or consultant of or to a business that competes with Azal Coffee. On our request, the transferee may be required to sign an acknowledgement of compliance with this prohibition.
- (k) If the transfer involves installment payments by the transferee to the Seller, the Seller must sign a subordination agreement under which the Seller subordinates its right to receive any installment from the transferee to our right to receive all amounts due to us through the due date of the installment. The subordination agreement must be in a format and contain terms and conditions specified by us.
- (I) Your landlord must allow the lease for the Franchise Location to be transferred to the transferee.
- (m) You, the Seller, and the proposed transferee must comply with any other standard procedures specified by us.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, both the seller and the proposed transferee must adhere to standard procedures that Azal Coffee specifies during a franchise transfer. These procedures are put in place to protect Azal Coffee's brand and franchise system.
Specifically, the seller or the proposed buyer must take actions to ensure the franchise business complies with Azal Coffee's current standards for appearance, trade dress, equipment, and signage. Azal Coffee can require these updates either before or after the transfer is completed. The proposed transferee, including its owners, shareholders, officers, directors, partners, members, investors, employees, agents, family members and affiliates, must not be involved with any business that competes with Azal Coffee. The transferee may need to sign an acknowledgement confirming they comply with this non-compete clause upon Azal Coffee's request.
Furthermore, if the seller is receiving installment payments from the transferee, the seller must sign a subordination agreement. This agreement ensures that Azal Coffee's right to receive any outstanding payments from the seller takes precedence over the seller's right to receive installment payments from the transferee, up to the amount owed to Azal Coffee. The subordination agreement must follow the format and terms that Azal Coffee specifies. Additionally, the franchise location's landlord must approve the transfer of the lease to the transferee. Finally, both the seller and the proposed transferee must comply with any other standard procedures that Azal Coffee specifies.