What is the starting date for the three-year non-compete period after the Azal Coffee Franchise Agreement terminates?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
You and your shareholders, officers, directors, partners, members, managers, owners and investors, Family Members, and affiliates, must not, during the term of this Agreement and for a period of three (3) years after termination, expiration, or non-renewal of this Agreement, 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 of permit access to our Confidential Information to any person who is engaged or has arranged to become engaged in any activity in competition with Azal Coffees, including involvement, either as an owner (except no more than one percent (1%) of the publicly traded securities of an entity), member, manager, partner, director, officer, 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 or entity that franchises, licenses or otherwise grants to others the right to operate a Competing Business.
13.4 Definitions of Competing Business, Geographic Areas, and Family Members. The following definitions will apply to this Agreement:
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, the non-compete period lasts for three years after the termination, expiration, or non-renewal of the Franchise Agreement. This restriction applies to the franchisee, their shareholders, officers, directors, members, managers, partners, owners, investors, family members, and affiliates.
Specifically, these parties are prohibited from engaging in activities that could divert business from Azal Coffee to a competing business, sponsoring or encouraging others to operate a competing business, or employing individuals who are involved in competitive activities. This includes any involvement as an owner (with a minor exception for publicly traded securities), partner, director, officer, member, manager, employee, consultant, lender, representative, or agent of a competing business.
However, if a franchisee violates the non-compete agreement by operating a competing business after the Franchise Agreement ends, the three-year non-compete period will be extended. In this case, the non-compete period will last until three years after the franchisee ceases all activities that violate the non-compete agreement. This extension clause ensures that Azal Coffee can protect its business interests even if a franchisee attempts to circumvent the initial non-compete terms.