Does termination of a Multi-Unit Development Agreement with a Desi District franchisee give Desi District Franchise Group the right to terminate the franchise agreement?

According to Desi District's 2024 Franchise Disclosure Document, the termination of a Multi-Unit Development Agreement with a franchisee or their affiliate does not automatically grant Desi District Franchise Group the right to terminate the franchise agreement. This is explicitly stated as an exception within the conditions under which Desi District can terminate other agreements with the franchisee.

This provision protects franchisees who may have multiple agreements with Desi District. If a franchisee has a Multi-Unit Development Agreement and a separate franchise agreement, a breach of the development agreement leading to its termination will not, by itself, trigger the termination of the franchise agreement. This offers a degree of security to franchisees who have invested in multiple units or development rights, ensuring that a problem with one aspect of their business does not necessarily jeopardize their entire investment with Desi District.

However, it is important to note that other breaches or defaults under the franchise agreement could still lead to termination. The FDD outlines various scenarios where Desi District can terminate the agreement, such as failure to make payments, misrepresentation of facts, or repeated breaches within a 12-month period. Therefore, franchisees must remain compliant with all terms of the franchise agreement to avoid termination, regardless of the status of any Multi-Unit Development Agreement.