Under what conditions can the Azal Coffee franchise be terminated or expire?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Agreement | Summary |
|---|---|---|
| a. Length of the franchise term | Section 3.1 of Franchise Agreement; Section D of Transfer Addendum | 10 years. |
| b. Renewal or extension | Section 3.2 of | 2 options to renew of 5 years each. |
| of the term | Franchise Agreement; | |
| o. Our option to purchase | Section 16.3 of | We have the option to purchase the |
| your business | Franchise Agreement | assets of your business for fair market value on termination or expiration of your franchise. |
| g. "Cause" defined— curable defaults | Section 15.4 of Franchise Agreement; Section J of Renewal Addendum; Section J of Transfer Addendum | Notice and cure period is 10 days for monetary defaults and 30 days for other defaults. Curable defaults include: failure to enter into a lease for the Franchise Location; unable to complete training; unable to obtain necessary permits; a substantial number of complaints from customers; health or safety hazards to customers; unable to pay debts; bankruptcy or receivership; fail to pay final judgment or allow execution against business; failure to operate in accordance with standards; fail to purchase from Designated or Approved Suppliers; disputes among owners that materially affect the business; other material breaches of Franchise Agreement; cancellation of a guaranty. |
| h. "Cause" defined—non curable defaults | Sections 15.3 of Franchise Agreement | Termination is effective on receipt of notice. Non-curable defaults include: material misrepresentations of omissions; fraud; fail to sign confidentiality or noncompetition agreements; conviction of crime; failure to meet minimum sales requirements during any year of operation; repeat defaults; failure to attend meetings; abandonment; substance abuse that interferes with the business; any materially adverse conduct; lose right to occupy Franchise Location; assessed liquidated damages multiple times. |
Termination of the franchise agreement on bankruptcy or insolvency may not be enforceable under federal bankruptcy law (11 U.S.C. § 101 et seq.).
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, the franchise term is 10 years, with two options to renew for 5 years each, as detailed in Section 3.1 and 3.2 of the Franchise Agreement. Azal Coffee also has the option to purchase the assets of your business for fair market value when the franchise terminates or expires, according to Section 16.3 of the Franchise Agreement.
The Azal Coffee franchise agreement outlines conditions for termination due to both curable and non-curable defaults. Curable defaults, which allow for a notice and cure period, include failure to enter a lease, inability to complete training or obtain permits, a substantial number of customer complaints, health or safety hazards, inability to pay debts, bankruptcy, failure to operate according to standards, failure to purchase from approved suppliers, disputes among owners, and other material breaches. The notice and cure period is 10 days for monetary defaults and 30 days for other defaults, as specified in Section 15.4 of the Franchise Agreement.
Non-curable defaults, which result in termination effective upon receipt of notice, include material misrepresentations or omissions, fraud, failure to sign confidentiality or non-competition agreements, conviction of a crime, failure to meet minimum sales requirements, repeat defaults, failure to attend meetings, abandonment, substance abuse that interferes with the business, any materially adverse conduct, losing the right to occupy the franchise location, and being assessed liquidated damages multiple times, as detailed in Section 15.3 of the Franchise Agreement. Additionally, termination of the franchise agreement due to bankruptcy or insolvency may not be enforceable under federal bankruptcy law.