What constitutes 'good faith' when contesting an attachment or lien on a Desi District business?
Desi_District Franchise · 2024 FDDAnswer 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;
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to the 2024 Desi District Franchise Disclosure Document, an attachment or lien remaining on the business for 30 days constitutes a breach of the franchise agreement, potentially leading to termination. However, this is not the case if the franchisee is duly contesting the attachment or lien in good faith. The FDD does not define what 'good faith' means in this context.
Without a clear definition of 'good faith' within the FDD, prospective Desi District franchisees should seek clarification from the franchisor. Understanding the specific actions and documentation that Desi District would consider as 'good faith' is crucial. This could include promptly engaging legal counsel, filing appropriate legal challenges, and diligently pursuing a resolution to the attachment or lien.
It is important for potential franchisees to understand their obligations and rights regarding attachments or liens. Consulting with a legal professional experienced in franchise law is advisable to ensure they are fully aware of the steps necessary to protect their investment and maintain compliance with the franchise agreement. This proactive approach can help mitigate potential disputes and ensure a smoother business operation under the Desi District franchise.