Does the Desi District franchise agreement require a Guaranty Agreement?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 23: RECEIPTS]
- 2. Amendments. The Agreement (and any Guaranty Agreement) is amended to comply with the following:
- (1) Restrictive Covenants: Every contract by which Franchisee, any Guarantor, or any other person is restrained from exercising a lawful profession, trade, or business of any kind is subject to NDCC Section 9-08-06.
- (2) Situs of Arbitration Proceedings: Franchisee and any Guarantor are not required to agree to the arbitration of disputes at a location that is remote from the site of Franchisee's business.
- (3) Restrictions on Forum: Franchisee and any Guarantor are not required to consent to the jurisdiction of courts outside of North Dakota.
- (4) Liquidated Damages and Termination Penalties: Franchisee is not required to consent to liquidated damages or termination penalties.
- (5) Applicable Laws: The Agreement (and any Guaranty Agreement) is governed by the laws of the State of North Dakota.
- (6) Waiver of Trial by Jury: Franchisee and any Guarantor do not waive a trial by jury.
- (7) Waiver of Exemplary and Punitive Damages: The parties do not waive exemplary and punitive damages.
- (8) General Release: Franchisee and any Guarantor are not required to sign a general release upon renewal of the Agreement.
- (9) Limitation of Claims: Franchisee is not required to consent to a limitation of claims. The statute of limitations under North Dakota law applies.
- (10) Enforcement of Agreement: The prevailing party in any enforcement action is entitled to recover all costs and expenses including attorney's fees.
Source: Item 23 — RECEIPTS (FDD pages 52–140)
What This Means (2024 FDD)
According to the 2024 Desi District Franchise Disclosure Document, whether a Guaranty Agreement is required depends on the specific circumstances and potentially the state where the franchise is located. While the standard agreement may contemplate a guaranty, certain state-specific riders modify these terms.
Specifically, the North Dakota Rider amends the franchise agreement (and any Guaranty Agreement) to comply with North Dakota Century Code Section 9-08-06 regarding restrictions on lawful professions, trades, or businesses. It also stipulates that franchisees and any guarantors are not required to agree to arbitration in remote locations, consent to the jurisdiction of courts outside of North Dakota, consent to liquidated damages or termination penalties, waive a trial by jury, sign a general release upon renewal, or consent to a limitation of claims. The rider also specifies that the agreement (and any Guaranty Agreement) is governed by the laws of North Dakota.
This suggests that while Desi District's standard franchise agreement might include a Guaranty Agreement, its enforceability and specific terms are subject to state laws, particularly in states like North Dakota. A prospective franchisee should carefully review the franchise agreement, including any state-specific riders, and consult with legal counsel to understand the implications of any guaranty requirements.