If a Desi District franchisee fails to make a payment, is this considered a curable default?
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). |
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, a franchisee's failure to make payments is considered a curable default. Specifically, if a franchisee fails to make a payment, Desi District provides a 10-day period to cure the default. This means the franchisee has 10 days to correct the non-payment and avoid termination of the franchise agreement.
This cure period is a standard practice in franchising, allowing franchisees a reasonable opportunity to rectify payment issues. However, it's important to note that this cure period applies only to the first instance of non-payment. The FDD states that repeated defaults can lead to termination without the opportunity to cure.
It is important for prospective franchisees to understand the specific conditions under which Desi District may terminate the franchise agreement, both with and without the opportunity to cure, to ensure they can meet their obligations and protect their investment. Franchisees should also be aware that if they sign a Multi-Unit Development Agreement, termination of the MUDA does not give Desi District the right to terminate their franchise agreement. However, if their franchise agreement is terminated, Desi District has the right to terminate their MUDA.