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

According to Desi District's 2024 Franchise Disclosure Document, the termination of a Multi-Unit Development Agreement does not automatically give Desi District Franchise Group the right to terminate a franchise agreement. Specifically, if Desi District terminates a Multi-Unit Development Agreement with a franchisee or their affiliate, this event alone does not provide grounds for Desi District to terminate the existing franchise agreement.

This provision protects franchisees who may have multiple agreements with Desi District. If a franchisee has both a franchise agreement and a Multi-Unit Development Agreement, a breach and subsequent termination of the development agreement does not necessarily jeopardize the franchise agreement. This offers a degree of security for franchisees who are expanding their operations with Desi District through development agreements.

However, it is important to note that Desi District retains the right to terminate the franchise agreement under other circumstances, such as the franchisee receiving two or more notices of default within a 12-month period and then committing another breach. Additionally, if the franchisee breaches the franchise agreement itself, Desi District can terminate the agreement as outlined in other sections detailing default and termination conditions.