How many additional terms can a Desi District franchisee enter into a successor agreement 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, a franchisee can enter into a successor agreement for up to 3 additional terms. Each of these additional terms is for a period of 5 years. This option is not automatic; it is subject to certain conditions that the franchisee must meet before each expiration.
To be eligible for a successor agreement, the Desi District franchisee must notify Desi District Franchise Group of their election to renew within a specific timeframe, between 90 and 180 days prior to the end of the current term. The franchisee must also be in full compliance with the existing franchise agreement and any other agreements they have with Desi District or its affiliates, both at the time they elect to renew and at the time of the actual renewal.
Additionally, Desi District may require the franchisee to make renovations and changes to the business to meet the then-current system standards, potentially including a remodel. The franchisee will also need to execute Desi District's then-current standard franchise agreement and related documents, which may have materially different terms, including higher fees. Finally, the franchisee and each owner must sign a general release of claims against Desi District and its affiliates.