How long can an attachment or lien remain on a Desi District business before it triggers termination?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
- (iii) a receiver or trustee for the Business or all or substantially all of Franchisee's property is appointed by any court, or Franchisee makes a general assignment for the benefit of Franchisee's creditors, or Franchisee is unable to pay its debts as they become due, or a levy or execution is made against the Business, or an attachment or lien remains on the Business for 30 days unless the attachment or lien is being duly contested in good faith by Franchisee, or a petition in bankruptcy is filed by Franchisee, or such a petition is filed against or consented to by Franchisee and the petition is not dismissed within 45 days, or Franchisee is adjudicated as bankrupt;
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, an attachment or lien can remain on the business for up to 30 days before it can trigger termination of the franchise agreement. However, this is conditional. If the franchisee is actively contesting the attachment or lien in good faith, it will not trigger termination, regardless of how long it remains.
This clause protects Desi District from potential financial instability or legal issues affecting the franchisee's business. It ensures that the franchisee is managing their business responsibly and addressing any financial or legal claims promptly. The good faith clause provides some leeway for franchisees facing legitimate disputes, preventing immediate termination if they are actively working to resolve the issue.
For a prospective Desi District franchisee, this means maintaining sound financial practices and promptly addressing any legal claims or attachments against the business. Documenting and demonstrating a good-faith effort to contest any liens is crucial to avoid potential termination of the franchise agreement. Franchisees should seek legal counsel if they encounter such issues to ensure they are handling them appropriately and in compliance with the franchise agreement.