Under what conditions can Azal Coffee assign the Franchise Agreement to another party?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
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- 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)
The 2024 Azal Coffee Franchise Disclosure Document outlines specific conditions under which Durar Investment, LLC (the franchisor) can be assigned the franchisee's lease for the premises. These conditions are triggered by events related to the Franchise Agreement or the lease itself.
According to the FDD, Azal Coffee has the right to be assigned the franchisee's lease under the following circumstances: upon the expiration or termination of the Franchise Agreement, provided Azal Coffee gives written notice of its intent to exercise this option within thirty (30) days of the triggering event; upon the expiration or termination of the lease, or the franchisee's loss of possession of the premises due to default or other reasons, with Azal Coffee having a period to exercise its right to accept the assignment; and upon the franchisee's abandonment of the premises, which is conclusively presumed if the business is not open and fully operational for two (2) consecutive days.
Upon Azal Coffee's notice of exercise, the lease and all rights to the premises are automatically assigned to Azal Coffee without the need for further documentation. If Azal Coffee fails to provide notice within the specified time, it forfeits its rights under this section. Both the landlord and franchisee agree to execute documents confirming the assignment in a form presented by Azal Coffee, including a short form of lease suitable for recording. This provision ensures that Azal Coffee has the option to maintain control of the location should the franchisee's operation cease for any of the reasons specified.
This clause in the Franchise Agreement is significant for prospective franchisees as it highlights the franchisor's control over the business location. If a franchisee's agreement is terminated, or if they default on their lease or abandon the premises, Azal Coffee has the right to step in and take over the lease. This protects Azal Coffee's interests by allowing them to continue operating a franchise at that location, if desired. Franchisees should understand these conditions and their implications for their business operations and potential exit strategies.