Which section of the Desi District Franchise Agreement applies to transfers upon death or incapacity?

According to Desi District's 2024 Franchise Disclosure Document, Section 15.4 of the Franchise Agreement addresses transfers upon the death or incapacity of the franchisee. Specifically, if the franchisee (or the owner with the largest ownership interest, if the franchisee is an entity) dies or becomes incapacitated, their executor, administrator, or personal representative must transfer the business within nine months. This transfer can be to a third party approved by Desi District or to another existing owner.

This section is important for prospective franchisees as it outlines the procedure to be followed in the event of death or incapacity, ensuring business continuity. The requirement for transfer within nine months ensures that the business does not remain in limbo and continues to operate under the Desi District brand. The stipulation that the transfer must comply with Section 15.2 indicates that the standard transfer conditions, such as Desi District's approval and potentially a transfer fee, will apply.

Section 15.2, referenced in Section 15.4, details the conditions Desi District may impose on transfers, including a $10,000 transfer fee plus broker fees, the assignee meeting Desi District's standards for new franchisees, and the assignee executing Desi District's current franchise agreement. This ensures that any new owner meets Desi District's standards and is committed to the franchise system. The right of first refusal, as mentioned in Section 15.5, does not apply in the event of transfer to a co-owner, spouse, sibling, or child of an owner.

For a prospective franchisee, understanding these transfer conditions is crucial. It is important to discuss with Desi District the potential implications and requirements for transferring the franchise in the event of death or incapacity, including any specific criteria for approval of a third-party transferee and the potential costs involved.