Under the Azal Coffee franchise agreement, will obligations for amounts owed to Azal Coffee survive the termination or expiration of the agreement?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
unctive relief, an action for damages caused by the breach, or termination of this Agreement.
15.9 Security.
Until all payments are made and any damages, costs, and expenses incurred or suffered by us have been paid, we shall have, and you shall be deemed to have granted, a lien against any and all of the furnishings, fixtures, and equipment, and all other assets of the Franchise Business, and your interest in the Lease and the Location.
ARTICLE 16 - EFFECT OF TERMINATION OR EXPIRATION
16.1 Your Obligations on Expiration or Termination.
If this Agreement expires or terminates for any reason (including termination on a transfer), your rights to use the Intellectual Property and the Franchise Systems and all other rights associated with being an authorized Azal Coffee franchisee will cease and you must do the following:
- (a) You must immediately and permanently discontinue the use of the Intellectual Property, the Confidential Information, the Franchise Systems, and any trademarks, names, and logos confusingly similar to the Marks or Trade Dress, and any other ma
Source: Item 22 — CONTRACTS (FDD page 51)
What This Means (2024 FDD)
According to the 2024 Azal Coffee Franchise Disclosure Document, your obligations to Azal Coffee for any outstanding amounts will survive the termination or expiration of the franchise agreement. Specifically, Azal Coffee retains a lien against the assets of your franchise business until all payments, damages, costs, and expenses you owe have been fully paid. This means that even after the franchise agreement ends, Azal Coffee can still claim your business assets to cover any outstanding debts.
This is further reinforced by the stipulation that your obligation to make full and timely payments of all fees and other amounts owed to Azal Coffee is absolute and unconditional. You cannot delay or withhold payments based on alleged nonperformance by Azal Coffee or for any other reason. Azal Coffee can also apply your payments to cover any accrued late charges, interest, or delinquent fees before crediting the payment to the current amount due.
In practical terms, this means that if you are considering exiting the Azal Coffee franchise system, whether through termination or expiration of the agreement, you must ensure that all financial obligations to Azal Coffee are settled. Failure to do so could result in Azal Coffee pursuing legal action and claiming your business assets to recover the outstanding amounts. This is a fairly standard practice in franchising, as franchisors typically want to protect their financial interests and ensure that all debts are cleared before a franchisee exits the system.