Under what conditions is Azal Coffee considered in default of the Franchise Agreement?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
our Store opens for business unless sooner terminated as provided in this Agreement.
3.2 Option.
You will have the option to remain an Azal Coffee franchisee for two (2) additional periods of five (5) years if, at the beginning of the option period, all of the following conditions are fulfilled:
- (a) You are not in default under this Agreement or any other agreement with us or our affiliates and no affiliate of yours is in default under any agreement with us or our affiliates.
- (b) Within the last thirty-six (36) months we have not sent you two (2) or more notices of default of the terms of this Agreement or of any of our specifications, standards, or operating procedures (whether or not the notices related to the same or different violations and whether or not you have remedied those violations).
- (c) You provide written notice of your intent to continue as a franchisee not more than twelve (12) months and not less than six (6) months before the beginning of the option period.
- (d) You are able to maintain possession of the Franchise Location or you have been able to secure and develop, in compliance with our then applicable standards used in the granting of a franchise, suitable alternative premises within your Protected Area for your Store.
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
Based on the 2024 Azal Coffee Franchise Disclosure Document, being in default under the Franchise Agreement or any other agreement with Azal Coffee or its affiliates is a condition that prevents a franchisee from renewing their franchise agreement. Specifically, to be eligible for renewal for two additional five-year periods, the franchisee must not be in default under any agreement with Azal Coffee or its affiliates.
Additionally, if Azal Coffee has sent the franchisee two or more notices of default within the 36 months before the option period, regardless of whether the violations were remedied or related to the same or different issues, the franchisee is not eligible for renewal. The franchisee must also satisfy all material reporting requirements and monetary obligations to Azal Coffee, its affiliates, suppliers, vendors, and creditors within the specified time for satisfaction or cure of default, with an exception for reasonable disputes being resolved in good faith.
Furthermore, the franchisee must meet any current training requirements for new or existing franchisees to qualify for renewal. These stipulations ensure that only franchisees in good standing, who adhere to the brand's standards and fulfill their obligations, are granted the opportunity to continue operating under the Azal Coffee brand. This protects the integrity and reputation of the Azal Coffee franchise system.