Does Desi District Franchise Group rely on the franchisee's business skill when entering into the agreement?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
ICLE 15. TRANSFERS**
- 15.1 By Desi District Franchise Group. Desi District Franchise Group may transfer or assign this Agreement, or any of its rights or obligations under this Agreement, to any person or entity, and Desi District Franchise Group may undergo a change in ownership and/or control, without the consent of Franchisee.
- 15.2 By Franchisee. Franchisee acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that Desi District Franchise Group entered into this Agreement in reliance on Franchisee's business skill, financial capacity, personal character, experience, and business ability. Accordingly, Franchisee shall not conduct or undergo a Transfer without providing Desi District Franchise Group at least 60 days prior notice of the proposed Transfer, and without obtaining Desi District Franchise Group's consent. In granting any such consent, Desi District Franchise Group may impose conditions, including, without limitation, the following:
- (i) Desi District Franchise Group receives a transfer fee equal to $10,000 plus any broker fees and other out-of-pocket costs incurred by Desi District Franchise Group;
- (ii) the proposed assignee and its owners have completed Desi District Franchise Group's franchise application processes, meet Desi District Franchise Group's then-applicable standards for new franchisees, and have been approved by Desi District Franchise Group as franchisees;
- (iii) the proposed assignee
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, Desi District Franchise Group does rely on the franchisee's business skills when entering into the franchise agreement. The agreement states that Desi District entered into the agreement in reliance on the franchisee's business skill, financial capacity, personal character, experience, and business ability.
Because of this reliance, the franchisee is restricted from transferring the agreement without prior notice and consent from Desi District. Desi District may impose conditions when granting consent for a transfer.
These conditions include receiving a transfer fee of $10,000 plus any broker fees and out-of-pocket costs incurred by Desi District. The proposed assignee must also complete Desi District's franchise application processes and meet the then-applicable standards for new franchisees. Additionally, the assignee must not be a competitor and must execute Desi District's current form of franchise agreement, which may contain materially different provisions.