Where in the Desi District Franchise Agreement can I find the definition of 'cause' for termination?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
oyalty Fees | $102,704.02 | |
| 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). |
| h. "Cause" definednon curable defaults | FA: § 14.2 MUDA: § 4 | FA: Misrepresentation when applying to be a franchisee; knowingly submitting false information; bankruptcy; lose possession of your location; violation of law; violation of confidentiality; violation of non-compete; violation of transfer restrictions; slander or libel of us; refusal to cooperate with our business inspection; cease operations for more than 5 consecutive days; three defaults in 12 months; cross-termination; charge or conviction of, or plea to a felony, or commission or accusation of an act that is reasonably likely to materially and unfavorably affect our brand; any other breach of franchise agreement which by its nature cannot be cured. MUDA: failure to meet development schedule; violation of franchise agreement or other agreement which gives us the right to terminate it. |
| i. Franchisee's obligations on termination/non renewal | FA: §§ 14.3 – 14.6 MUDA: none | Pay all amounts due; return Manual and proprietary items; notify phone, internet, and other providers and transfer service; cease doing business; remove identification; purchase option by us. |
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, the definition of 'cause' for termination can be found in Section 14.2 of the Franchise Agreement (FA) and Section 4 of the Multi-Unit Development Agreement (MUDA). The FDD outlines two categories of 'cause' for termination: curable defaults and non-curable defaults.
Curable defaults, as defined in Section 14.2 of the FA, include non-payment, which allows for a 10-day cure period; violations of the franchise agreement other than non-curable defaults, providing a 30-day cure period; and operating the franchise in a manner dangerous to health or safety, which requires a 48-hour cure period. Non-curable defaults, also defined in Section 14.2 of the FA and Section 4 of the MUDA, include misrepresentation when applying to be a franchisee, knowingly submitting false information, bankruptcy, losing possession of the location, violating laws, violating confidentiality or non-compete agreements, violating transfer restrictions, slandering or libeling Desi District, refusing to cooperate with business inspections, ceasing operations for more than 5 consecutive days, incurring three defaults within 12 months, cross-termination, being charged or convicted of a felony, or any other breach of the franchise agreement that cannot be cured. For the MUDA, non-curable defaults also include failure to meet the development schedule or violating any agreement that gives Desi District the right to terminate it.
It is important for a prospective Desi District franchisee to understand these definitions, as they specify the conditions under which the franchisor can terminate the franchise agreement. Understanding the curable defaults allows a franchisee to take corrective action and maintain the franchise agreement, while awareness of non-curable defaults highlights actions that could lead to immediate termination. This knowledge is crucial for managing the franchise effectively and avoiding potential pitfalls that could jeopardize the business's operation and relationship with Desi District.