Does the Desi District Multi-Unit Development Agreement define 'cause' related to non-curable defaults?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or other agreement | Summary |
|---|---|---|
| e. Termination by | Not Applicable | |
| franchisor without cause | ||
| f. Termination by franchisor with cause | FA: § 14.2 MUDA: § 4 | We may terminate your agreement for cause, subject to any applicable notice and cure opportunity. If you sign a Multi-Unit Development Agreement, termination of your MUDA does not give us the right to terminate your franchise agreement. However, if your franchise agreement is terminated, we have the right to terminate your MUDA. |
| g. "Cause" defined curable defaults | FA: § 14.2 MUDA: none | Non-payment by you (10 days to cure); violate franchise agreement other than non-curable default (30 days to cure); operate in a manner dangerous to health or safety (48 hours to cure). |
| h. "Cause" definednon curable defaults | FA: § 14.2 MUDA: § 4 | FA: Misrepresentation when applying to be a franchisee; knowingly submitting false information; bankruptcy; lose possession of your location; violation of law; violation of confidentiality; violation of non-compete; violation of transfer restrictions; slander or libel of us; refusal to cooperate with our business inspection; cease operations for more than 5 consecutive days; three defaults in 12 months; cross-termination; charge or conviction of, or plea to a felony, or commission or accusation of an act that is reasonably likely to materially and unfavorably affect our brand; any other breach of franchise agreement which by its nature cannot be cured. MUDA: failure to meet development schedule; violation of franchise agreement or other agreement which gives us the right to terminate it. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 44–48)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, the Multi-Unit Development Agreement (MUDA) specifies what constitutes 'cause' for termination due to non-curable defaults. These defaults, which cannot be remedied, can lead to the termination of the MUDA.
The FDD outlines specific instances that constitute non-curable defaults under the MUDA. These include failing to meet the development schedule and violating the franchise agreement or any other agreement that grants Desi District the right to terminate the MUDA. This means that if a franchisee fails to open the number of restaurants within the timeframe specified in the development agreement, Desi District has grounds to terminate the agreement.
For a prospective Desi District multi-unit franchisee, this definition is crucial. It highlights the importance of adhering to the development schedule outlined in the MUDA and complying with all aspects of the franchise agreement. Failure to do so could result in the termination of the agreement and the loss of the opportunity to develop multiple Desi District locations.