Under what circumstances does Azal Coffee have the option to purchase the assets of the Franchise Business?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
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, has specific options regarding the lease and premises of the franchise location, but not the assets of the Franchise Business. The Landlord and Franchisee grant Azal Coffee the exclusive right to be assigned all right, title, and interest of the Franchisee in and to the Lease and the Premises under certain conditions.
Azal Coffee can exercise this right upon the expiration or termination of the Franchise Agreement, provided they give written notice within thirty (30) days of the triggering event. They can also exercise this right upon the expiration or termination of the Lease, or if the franchisee loses possession of the premises due to default or other reasons. In this case, the Landlord must notify Azal Coffee of the default, and Azal Coffee must act within the specified timeframes to accept the lease assignment.
Furthermore, Azal Coffee can assume the lease if the franchisee abandons the premises. Abandonment is conclusively presumed if the Azal Coffee business is not open and fully operational for two (2) consecutive days. Upon giving notice of exercise, the lease and all rights to the premises are automatically assigned to Azal Coffee without further documentation. However, if Azal Coffee fails to provide notice within the applicable time, they forfeit their rights under this section. The Landlord and Franchisee must execute documents confirming this assignment as presented by Azal Coffee.