What is the initial term length of the Desi District franchise agreement?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
ARTICLE 3. TERM
- 3.1 Term. This Agreement commences on the Effective Date and continues for 10 years.
- 3.2 Successor Agreement. When the term of this Agreement expires, Franchisee may enter into a successor agreement for up to 3 additional periods of 5 years each, subject to the following conditions prior to each expiration:
- (i) Franchisee notifies Desi District Franchise Group of the election to renew between 90 and 180 days prior to the end of the term;
- (ii) Franchisee (and its affiliates) are in compliance with this Agreement and all other agreements with Desi District Franchise Group (or any of its affiliates) at the time of election and at the time of renewal;
- (iii) Franchisee has made or agrees to make (within a period of time acceptable to Desi District Franchise Group) renovations and changes to the Business as Desi District Franchise Group requires (including a Remodel, if applicable) to conform to the then-current System Standards;
- (iv) Franchisee and its Owners execute Desi District Franchise Group's then-current standard form of franchise agreement and related documents (including personal guaranty), which may be materially different than this form (including, without limitation, higher and/or different fees), except that Franchisee will not pay another initial franchise fee and will not receive more renewal or successor terms than described in this Section;
- (v) Franchisee and each Owner executes a general release (on Desi District Franchise Group's then-standard form) of any and all claims against Desi District Franchise Group, its affiliates, and their respective owners, officers, directors, agents and employees.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, the initial term of the franchise agreement is 10 years, commencing on the effective date. This means a franchisee will operate under the agreement for a decade before needing to consider renewal.
At the end of the initial 10-year term, a franchisee has the option to enter into a successor agreement. This agreement can be renewed for up to three additional periods, each lasting 5 years. However, this renewal is not automatic and is subject to certain conditions.
To renew, the Desi District franchisee must notify Desi District Franchise Group between 90 and 180 days before the end of the current term. They must also be in full compliance with the existing agreement and any other agreements with Desi District Franchise Group. Furthermore, the franchisee may be required to make renovations to the business to meet the then-current system standards. They will also need to execute Desi District Franchise Group's current standard franchise agreement, which may have different terms and fees, although they will not have to pay another initial franchise fee. Finally, the franchisee must sign a general release of claims against Desi District Franchise Group.