What is the length of each additional term in the Desi District successor agreement?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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 franchise agreement term is for 10 years. Upon expiration of the initial term, a franchisee may have the option to enter into a successor agreement.
The Desi District franchise agreement allows for up to 3 additional renewal periods, each lasting 5 years. However, this is contingent upon meeting specific conditions before each renewal. These conditions include notifying Desi District of the intent to renew within a specified timeframe, compliance with all agreements, completing required renovations, executing the then-current franchise agreement, and providing a general release of claims against Desi District.
It's important to note that Desi District can modify the terms of the renewal agreement, potentially including higher fees. However, the franchisee will not pay another initial franchise fee and will not receive more renewal or successor terms than described in the agreement. If a franchisee continues to operate after the term expires without a renewal agreement, Desi District can either require them to cease operations or bind them to a 5-year renewal term.