If a Desi District franchisee's Multi-Unit Development Agreement (MUDA) is terminated, what happens to the franchise agreement?
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. |
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, the termination of a Multi-Unit Development Agreement (MUDA) does not automatically lead to the termination of the franchise agreement. This means that even if Desi District terminates the MUDA, the franchisee can continue to operate their existing Desi District franchise under the terms of the franchise agreement.
However, the reverse is not true. If the franchise agreement is terminated, Desi District has the right to terminate the MUDA. This implies that the franchise agreement takes precedence over the MUDA. The MUDA is contingent upon the franchise agreement remaining in effect.
This distinction is important for prospective franchisees to understand. While a MUDA termination alone won't shut down an existing Desi District franchise, a franchise agreement termination will also nullify the MUDA, preventing further development under that agreement. Franchisees should carefully consider the conditions under which either agreement can be terminated, as outlined in their respective sections.