Does the Desi District Franchise Group have the right to require a remodel of the location?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
of obsolete or worn out signage, floor coverings, furnishings, equipment and décor. Franchisee acknowledges that the System Standards may include requirements for cleaning, maintenance, and repair.
- 7.13 Remodeling. In addition to Franchisee's obligations to comply with all System Standards in effect from time to time, Desi District Franchise Group may require Franchisee to undertake and complete a Remodel of the Location to Desi District Franchise Group's satisfaction. Franchisee must complete the Remodel in the time frame specified by Desi District Franchise Group. Desi District Franchise Group may require the Franchisee to submit plans for Desi District Franchise Group's reasonable approval prior to commencing a required Remodel. Desi District Franchise Group's right to require a Remodel is limited as follows: (i) the Remodel will not be required in the first two or last two years of the term (except that a Remodel may be required as a condition to renewal of the term or a Transfer), and (ii) a Remodel will not be required more than once every five years from the date on which Franchisee was required to complete the prior Remodel.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
Yes, according to Desi District's 2024 Franchise Disclosure Document, the Desi District Franchise Group has the right to require franchisees to remodel their locations. Desi District may require a franchisee to undertake and complete a remodel of the location to Desi District's satisfaction. The franchisee is responsible for completing the remodel within the timeframe that Desi District specifies. Desi District also has the right to ask the franchisee to submit plans for the remodel for reasonable approval before starting the remodel. A "Remodel" is defined as a refurbishment, renovation, and remodeling of the Location to conform to the building design, exterior facade, trade dress, signage, fixtures, furnishings, equipment, decor, color schemes, presentation of the Marks, and other System Standards in a manner consistent with the image then in effect for a new Desi District business.
However, there are some limitations to how often Desi District can mandate a remodel. Desi District will not require a remodel in the first two or last two years of the franchise term. An exception to this is that a remodel may be required as a condition of renewal of the term or a transfer of the franchise. Also, Desi District will not require a remodel more than once every five years from the date the franchisee was required to complete the previous remodel.
These remodel requirements are typical in franchising, as franchisors like Desi District need to maintain brand standards and consistency across all locations. For a prospective franchisee, it's important to understand the potential costs associated with remodeling and to factor those costs into their financial projections. It would be prudent to discuss with existing franchisees their experiences with remodels and any financial assistance that Desi District might offer to offset the costs.