factual

What are the consequences if a receiver or trustee is appointed for a Desi District franchisee's business?

Desi_District Franchise · 2024 FDD

Answer from 2024 FDD Document

  • (iii) a receiver or trustee for the Business or all or substantially all of Franchisee's property is appointed by any court, or Franchisee makes a general assignment for the benefit of Franchisee's creditors, or Franchisee is unable to pay its debts as they become due, or a levy or execution is made against the Business, or an attachment or lien remains on the Business for 30 days unless the attachment or lien is being duly contested in good faith by Franchisee, or a petition in bankruptcy is filed by Franchisee, or such a petition is filed against or consented to by Franchisee and the petition is not dismissed within 45 days, or Franchisee is adjudicated as bankrupt;

  • 14.3 Effect of Termination. Upon termination or expiration of this Agreement, all obligations that by their terms or by reasonable implication survive termination, including those pertaining to non-competition, confidentiality, indemnity, and dispute resolution, will remain in effect, and Franchisee must immediately:

  • (i) pay all amounts owed to Desi District Franchise Group based on the operation of the Business through the effective date of termination or expiration;

  • (ii) return to Desi District Franchise Group all copies of the Manual, Confidential Information and any and all other materials provided by Desi District Franchise Group to Franchisee or created by a third party for Franchisee relating to the operation of the Business, and all items containing any Marks, copyrights, and other proprietary items; and delete all Confidential Information and proprietary materials from electronic devices;

  • (iii) notify the telephone, internet, email, electronic network, directory, and listing entities of the termination or expiration of Franchisee's right to use any numbers, addresses, domain names, locators, directories and listings associated with any of the Marks, and authorize their transfer to Desi District Franchise Group or any new franchisee as may be directed by Desi District Franchise Group, and Franchisee hereby irrevocably appoints Desi District Franchise Group, with full power of substitution, as its true and lawful attorney-in-fact, which appointment is coupled with an interest; to execute such directions and authorizations as may be necessary or appropriate to accomplish the foregoing; and

  • (iv) cease doing business under any of the Marks.

  • 14.4 Remove Identification. Within 30 days after termination or expiration, Franchisee shall at its own expense "de-identify" the Location so that it no longer contains the Marks, signage, or any trade dress of a Desi District business, to the reasonable satisfaction of Desi District Franchise Group.

Source: Item 22 — CONTRACTS (FDD page 52)

What This Means (2024 FDD)

According to Desi District's 2024 Franchise Disclosure Document, the appointment of a receiver or trustee for the franchisee's business or property can lead to termination of the franchise agreement. Specifically, if a receiver or trustee is appointed by any court for the Desi District business or for all or substantially all of the franchisee's property, Desi District Franchise Group has grounds to terminate the agreement. This also applies if the franchisee makes a general assignment for the benefit of their creditors, is unable to pay debts as they become due, or faces a levy or execution against the business that remains for 30 days (unless contested in good faith).

Additionally, the filing of a bankruptcy petition by the franchisee, or against the franchisee with their consent, which is not dismissed within 45 days, or an adjudication of bankruptcy, also constitutes grounds for termination.

Upon termination of the Desi District franchise agreement, the franchisee must immediately pay all outstanding amounts owed to Desi District Franchise Group, return all copies of the Manual, Confidential Information, and any other materials provided by Desi District Franchise Group, and cease using the Desi District marks. The franchisee is also required to notify relevant entities (telephone, internet, etc.) of the termination of their right to use any numbers, addresses, or listings associated with the Desi District marks and authorize their transfer to Desi District Franchise Group. Within 30 days of termination, the franchisee must de-identify the location, removing all Desi District signage and trade dress.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.