What is the duration of the Intercompany License Agreement for Desi District?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
Desi District, LLC, our affiliate, owns the trademarks described in this Item. Under an Intercompany License Agreement between us and Desi District, LLC, we have been granted the exclusive right to sublicense the trademarks to franchisees throughout the United States. The agreement is of perpetual duration. It may be modified only by mutual consent of the parties. It may be canceled by our affiliate only if (1) we materially misuse the trademarks and fail to correct the misuse, or (2) we discontinue commercial use of the trademarks for a continuous period of more than one year. The Intercompany License Agreement specifies that if it is ever terminated, your franchise rights will remain unaffected.
Source: Item 13 — TRADEMARKS (FDD pages 40–42)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, the Intercompany License Agreement between Desi District, LLC (the affiliate that owns the trademarks) and the franchisor is of perpetual duration. This agreement grants the franchisor the exclusive right to sublicense the trademarks to franchisees throughout the United States. The agreement can only be modified by mutual consent of both parties.
However, the Intercompany License Agreement can be canceled by Desi District, LLC if the franchisor materially misuses the trademarks and fails to correct the misuse, or if the franchisor discontinues commercial use of the trademarks for a continuous period of more than one year. Despite these conditions for cancellation, the agreement specifies that if it is ever terminated, a franchisee's franchise rights will remain unaffected.
This arrangement is fairly common in franchising, where a separate entity owns the intellectual property and licenses it to the franchising company. The perpetual nature of the agreement provides some assurance to franchisees that the franchisor will have long-term rights to the trademarks. The conditions for cancellation protect the trademark owner (Desi District, LLC) from misuse or abandonment of the trademarks, while the protection of the franchisee's rights ensures that the franchisee's business is not jeopardized if the agreement is terminated.