Is the proposed assignee of a Desi District franchise required to pay an initial franchise fee?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
ICLE 15. TRANSFERS**
- 15.1 By Desi District Franchise Group. Desi District Franchise Group may transfer or assign this Agreement, or any of its rights or obligations under this Agreement, to any person or entity, and Desi District Franchise Group may undergo a change in ownership and/or control, without the consent of Franchisee.
- 15.2 By Franchisee. Franchisee acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee and that Desi District Franchise Group entered into this Agreement in reliance on Franchisee's business skill, financial capacity, personal character, experience, and business ability. Accordingly, Franchisee shall not conduct or undergo a Transfer without providing Desi District Franchise Group at least 60 days prior notice of the proposed Transfer, and without obtaining Desi District Franchise Group's consent. In granting any such consent, Desi District Franchise Group may impose conditions, including, without limitation, the following:
- (i) Desi District Franchise Group receives a transfer fee equal to $10,000 plus any broker fees and other out-of-pocket costs incurred by Desi District Franchise Group;
- (ii) the proposed assignee and its owners have completed Desi District Franchise Group's franchise application processes, meet Desi District Franchise Group's then-applicable standards for new franchisees, and have been approved by Desi District Franchise Group as franchisees;
- (iii) the proposed assignee is not a Competitor;
- (iv) the proposed assignee executes Desi District Franchise Group's then-current form of franchise agreement and any related documents, which form may contain materially different provisions than this Agreement (provided, however, that the pr
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, a proposed assignee will not be required to pay an initial franchise fee. However, the assignee must meet Desi District's standards for new franchisees and be approved by them.
Several other conditions must be met for the transfer to be approved. Desi District must receive a transfer fee of $10,000 plus any broker fees and out-of-pocket costs they incur. The proposed assignee cannot be a competitor and must execute Desi District's current franchise agreement, which may contain different provisions than the original agreement. All owners of the proposed assignee must provide a guaranty, and the franchisee must have paid all monetary obligations to Desi District and its affiliates, as well as to any lessor, vendor, supplier, or lender to the business.
Additionally, the franchisee must not be in default or breach of the agreement or any other obligation to Desi District or its affiliates. The proposed assignee, its owners, and employees must undergo any required training, and the franchisee, its owners, and the transferee and its owners must execute a general release of Desi District. Finally, the business must fully comply with Desi District's most recent System Standards.