Does the Desi District franchise agreement provide for termination by the franchisor without cause?
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). |
| 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. |
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 franchise agreement does not allow for termination by the franchisor without cause. The table in Item 17 outlines various termination provisions, and the section for termination without cause by the franchisor indicates "Not Applicable".
However, Desi District can terminate the franchise agreement with cause, subject to any applicable notice and cure opportunity, as detailed in Section 14.2 of the Franchise Agreement (FA) and Section 4 of the Multi-Unit Development Agreement (MUDA). If a franchisee signs a MUDA, the termination of the MUDA does not automatically lead to the termination of the franchise agreement. Conversely, if the franchise agreement is terminated, Desi District has the right to terminate the MUDA.
The FDD specifies both curable and non-curable defaults that constitute cause for termination. Curable defaults include non-payment (with 10 days to cure), violations of the franchise agreement other than non-curable defaults (with 30 days to cure), and operating in a manner dangerous to health or safety (with 48 hours to cure). Non-curable defaults include misrepresentation during the application process, submitting false information, bankruptcy, loss of location possession, violation of law, confidentiality, or non-compete agreements, slander or libel against Desi District, refusal to cooperate with business inspections, ceasing operations for more than 5 consecutive days, three defaults within 12 months, cross-termination, a felony charge or conviction, or any breach that cannot be cured. For MUDA holders, failure to meet the development schedule or violating any agreement that gives Desi District the right to terminate also constitutes a non-curable default.