What is the exception to the lease provisions regarding proximity restrictions for other Desi District outlets, if the Franchisor becomes the lessee?

According to Desi District's 2024 Franchise Disclosure Document, if the franchisor becomes the lessee of a leased premises, any lease provision that limits the tenant's right to own or operate other Desi District outlets in proximity to the leased premises does not apply to the franchisor. This means Desi District, as the franchisor, would not be restricted by proximity clauses that would otherwise limit a franchisee's ability to operate multiple locations in close proximity.

This exception benefits Desi District by allowing it greater flexibility in establishing company-owned locations without being hindered by the same restrictions placed on franchisees. This could allow Desi District to strategically place corporate stores in areas that might otherwise be unavailable due to existing franchisee territories or proximity restrictions.

For a prospective franchisee, this clause highlights a potential difference in operating conditions between franchised and corporate-owned locations. While a franchisee might be limited by proximity restrictions outlined in their lease, Desi District itself would not face the same limitations if it takes over a lease. This could lead to situations where a corporate-owned store is located near a franchised location, potentially impacting the franchisee's business. Franchisees should understand this dynamic and consider its potential impact on their business when evaluating a Desi District franchise opportunity.