How many additional renewal periods are franchisees of Desi District eligible for?
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, franchisees may be eligible to enter into a successor agreement for up to 3 additional periods, each lasting 5 years, after the initial 10-year term expires. This means a franchisee could potentially operate their Desi District franchise for a total of 25 years, assuming all renewal conditions are met.
However, to qualify for each 5-year renewal term, the franchisee must meet several conditions. These include notifying Desi District of their election to renew within a specific timeframe (90 to 180 days before the end of the current term), maintaining compliance with all agreements, completing any required renovations to meet current system standards, executing the then-current franchise agreement (which may have different terms and fees), and signing a general release of claims against Desi District.
It's important to note that while franchisees won't pay another initial franchise fee upon renewal, the terms of the renewed agreement, including royalty fees, could be different from the original agreement. Desi District also retains the right to bind a franchisee to a 5-year renewal term under certain holdover conditions, further emphasizing the importance of understanding the renewal terms and conditions.