Are there any State Addenda to the Disclosure Document included as an exhibit in the Desi District FDD?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
Issuance Date: June 17th, 2024
I received a disclosure document dated 6/17/2024, that included the following Exhibits:
- A. State Administrators and Agents for Service of Process
- B. Franchise Agreement (with Guaranty and Non-Compete Agreement)
- C. Multi-Unit Development Agreement
- D. Rider to Lease Agreement
- E. Form of General Release
- F. Financial Statements
- G. Brand Standards Manual Table of Contents
- H. Current and Former Franchisees
- I. State Addenda to Disclosure Document
- J. State Addenda to Agreements
Source: Item 23 — RECEIPTS (FDD pages 52–140)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, Exhibit I, titled "State Addenda to Disclosure Document," is included as part of the FDD. Several states require franchisors to make specific amendments or additions to their standard FDD to comply with state laws. These addenda address state-specific regulations and provide additional disclosures or modifications to the franchise agreement.
For example, the FDD includes a California Addendum to the Disclosure Document, which notes that California Corporations Code, Section 31125 requires the franchisor to provide a disclosure document approved by the Department of Business Oversight before any material modification of an existing franchise is solicited. The California addendum also states that all owners of the franchise will be required to execute personal guarantees, potentially placing the marital assets of spouses in community property states at risk.
Additionally, there are addenda for Hawaii, North Dakota, Rhode Island, and Washington. The Hawaii addendum specifies that the franchises have been filed under the Franchise Investment Law of the State of Hawaii, and filing does not constitute approval or endorsement by the Director of Commerce and Consumer Affairs. The North Dakota addendum lists several provisions that the Securities Commissioner has deemed unfair or inequitable to North Dakota franchisees. The Rhode Island Rider modifies the franchise and multi-unit development agreement, particularly regarding jurisdiction and venue. The Washington Addendum notes that the state has a statute (RCW 19.100.180) that may supersede the franchise agreement, especially in areas of termination and renewal.
Prospective franchisees should carefully review any state addenda applicable to their state of residence or the location of their potential franchise. These addenda can significantly impact the terms and conditions of the franchise agreement and may provide additional rights or protections under state law.