What is the cure period for non-payment by a Desi District franchisee?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or other agreement | Summary |
|---|---|---|
| e. Termination by | Not Applicable | |
| franchisor without cause | ||
| f. Termination by franchisor with cause | FA: § 14.2 MUDA: § 4 | We may terminate your agreement for cause, subject to any applicable notice and cure opportunity. If you sign a Multi-Unit Development Agreement, termination of your MUDA does not give us the right to terminate your franchise agreement. However, if your franchise agreement is terminated, we have the right to terminate your MUDA. |
| g. "Cause" defined curable defaults | FA: § 14.2 MUDA: none | Non-payment by you (10 days to cure); violate franchise agreement other than non-curable default (30 days to cure); operate in a manner dangerous to health or safety (48 hours to cure). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 44–48)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, a franchisee has a 10-day cure period if they fail to make required payments. This means that if a Desi District franchisee does not pay amounts owed to the franchisor on time, the franchisee has ten days to correct the non-payment. If the franchisee pays the outstanding amount within this 10-day period, Desi District cannot terminate the franchise agreement on the grounds of non-payment.
However, if the franchisee fails to pay the amount owed within the 10-day cure period, Desi District has grounds to terminate the franchise agreement, as specified in Section 14.2 of the Franchise Agreement. It is important to note that this cure period applies specifically to non-payment and may differ for other types of defaults under the franchise agreement. For instance, if a franchisee violates the franchise agreement in a way that isn't a non-curable default, they have 30 days to cure the violation.
Furthermore, if a Desi District franchisee operates in a manner that is dangerous to health or safety, they only have 48 hours to cure the default. The FDD also defines certain defaults as non-curable, such as misrepresentation when applying to be a franchisee or bankruptcy, which would allow Desi District to terminate the agreement without any opportunity to cure the default. Therefore, it is crucial for prospective franchisees to understand all the terms and conditions related to termination and cure periods outlined in the franchise agreement.