Under what conditions will Azal Coffee approve a franchise transfer?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Agreement | Summary |
|---|---|---|
| franchise. Sublicensing of your rights is not a permitted transfer. | ||
| l. Our approval of a transfer by you | Sections 14.2 and 14.3 of Franchise Agreement | You must have our written consent to transfer your franchise. We will not unreasonably withhold consent to a permitted transfer. |
| m. Conditions for our approval of the transfer | Section 14.3 of Franchise Agreement | The proposed transferee meets the conditions we have set for any new franchisee; we find the terms of the proposed transfer to be reasonable , you must be in compliance with all obligations to us and must pay us and all suppliers all monies owing; release signed by you; the new franchisee completes training; the new franchisee signs, at our option, a new Franchise Agreement on the standard form in use by us at the time of the transfer or an assumption of the existing Franchise Agreement; transfer fee paid; you or the proposed transferee must take action specified by us to comply with current appearance, equipment, and signage requirements; proposed transferee and affiliates are not in competition with a Azal Coffee; subordination agreement signed by you (if installment payments required); landlord permits assignment of lease; and you and the proposed transferee comply with other standard procedures specified by us. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 42–47)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, a franchisee needs Azal Coffee's written consent to transfer their franchise. Azal Coffee states that it will not unreasonably withhold consent for a permitted transfer.
However, Azal Coffee has several conditions that must be met for the transfer to be approved. The proposed transferee must meet all the conditions that Azal Coffee has set for new franchisees. The terms of the proposed transfer must be reasonable in Azal Coffee's eyes. The franchisee must be in compliance with all obligations to Azal Coffee and must pay all monies owed to Azal Coffee and its suppliers. Both the franchisee and Azal Coffee must sign a release. The new franchisee must complete the required training.
At Azal Coffee's option, the new franchisee must sign either a new Franchise Agreement (using the standard form in use at the time of transfer) or an assumption of the existing Franchise Agreement. The transfer fee must be paid. Either the current franchisee or the proposed transferee must take actions specified by Azal Coffee to comply with current standards for appearance, equipment, and signage. The proposed transferee and any of their affiliates must not be in competition with Azal Coffee. If installment payments are required, a subordination agreement must be signed by the franchisee. The landlord must permit the assignment of the lease. Finally, both the franchisee and the proposed transferee must comply with any other standard procedures specified by Azal Coffee.
These conditions are fairly typical in franchising, as franchisors want to ensure that any new franchisee meets their standards and will not harm the brand. Franchisees looking to transfer should carefully review Section 14.3 of the Franchise Agreement to fully understand all requirements and potential costs involved.