What happens if Desi District (or any affiliate) terminates another agreement with the franchisee (or any affiliate)?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
(xii) Desi District Franchise Group (or any affiliate) terminates any other agreement with Franchisee (or any affiliate) due to the breach of such other agreement by Franchisee (or its affiliate) (provided that termination of a Multi-Unit Development Agreement with Franchisee or its affiliate shall not give Desi District Franchise Group the right to terminate this Agreement);
14.3 Effect of Termination. Upon termination or expiration of this Agreement, all obligations that by their terms or by reasonable implication survive termination, including those pertaining to non-competition, confidentiality, indemnity, and dispute resolution, will remain in effect, and Franchisee must immediately:
(i) pay all amounts owed to Desi District Franchise Group based on the operation of the Business through the effective date of termination or expiration;
(ii) return to Desi District Franchise Group all copies of the Manual, Confidential Information and any and all other materials provided by Desi District Franchise Group to Franchisee or created by a third party for Franchisee relating to the operation of the Business, and all items containing any Marks, copyrights, and other proprietary items; and delete all Confidential Information and proprietary materials from electronic devices;
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, if Desi District (or any affiliate) terminates another agreement with a franchisee (or any affiliate) due to a breach of that other agreement by the franchisee (or its affiliate), Desi District has the right to terminate the franchise agreement. However, this does not apply to the termination of a Multi-Unit Development Agreement with the franchisee or its affiliate.
Upon termination of the franchise agreement, the franchisee must fulfill several obligations. The franchisee must immediately pay all outstanding amounts owed to Desi District based on the business's operation up to the termination date. Additionally, the franchisee is required to return all copies of the manual, confidential information, and any other materials provided by Desi District, including items containing trademarks, copyrights, and proprietary information. The franchisee must also delete all confidential information and proprietary materials from electronic devices.
These terms are fairly standard in franchising, as franchisors typically want to protect their brand, system, and confidential information. Franchisees should be aware that breaching one agreement with a franchisor can have ramifications for other agreements they may have, potentially leading to the termination of multiple business ventures with that franchisor. It is important to adhere to all contractual obligations to avoid such consequences.