Under what circumstances can Desi District terminate the franchise agreement with cause?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or other agreement | Summary |
|---|---|---|
| e. Termination by | Not Applicable | |
| franchisor without cause | ||
| f. Termination by franchisor with cause | FA: § 14.2 MUDA: § 4 | We may terminate your agreement for cause, subject to any applicable notice and cure opportunity. If you sign a Multi-Unit Development Agreement, termination of your MUDA does not give us the right to terminate your franchise agreement. However, if your franchise agreement is terminated, we have the right to terminate your MUDA. |
| g. "Cause" defined curable defaults | FA: § 14.2 MUDA: none | Non-payment by you (10 days to cure); violate franchise agreement other than non-curable default (30 days to cure); operate in a manner dangerous to health or safety (48 hours to cure). |
| h. "Cause" definednon curable defaults | FA: § 14.2 MUDA: § 4 | FA: Misrepresentation when applying to be a franchisee; knowingly submitting false information; bankruptcy; lose possession of your location; violation of law; violation of confidentiality; violation of non-compete; violation of transfer restrictions; slander or libel of us; refusal to cooperate with our business inspection; cease operations for more than 5 consecutive days; three defaults in 12 months; cross-termination; charge or conviction of, or plea to a felony, or commission or accusation of an act that is reasonably likely to materially and unfavorably affect our brand; any other breach of franchise agreement which by its nature cannot be cured. MUDA: failure to meet development schedule; violation of franchise agreement or other agreement which gives us the right to terminate it. |
| i. Franchisee's obligations on termination/non renewal | FA: §§ 14.3 – 14.6 MUDA: none | Pay all amounts due; return Manual and proprietary items; notify phone, internet, and other providers and transfer service; cease doing business; remove identification; purchase option by us. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 44–48)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, Desi District can terminate the franchise agreement with cause, subject to any applicable notice and cure opportunity. If a franchisee signs a Multi-Unit Development Agreement (MUDA), the termination of the MUDA does not automatically give Desi District the right to terminate the franchise agreement. However, if the franchise agreement is terminated, Desi District has the right to terminate the MUDA.
'Cause' for termination includes both curable and non-curable defaults. Curable defaults include non-payment, where the franchisee has 10 days to cure the default; violating the franchise agreement other than a non-curable default, with 30 days to cure; and operating in a manner dangerous to health or safety, with 48 hours to cure.
Non-curable defaults include misrepresentation when applying to be a franchisee, knowingly submitting false information, bankruptcy, losing possession of the location, violating a law, violating confidentiality or non-compete agreements, violating transfer restrictions, slandering or libeling Desi District, refusing to cooperate with business inspections, ceasing operations for more than 5 consecutive days, having three defaults in 12 months, cross-termination, being charged or convicted of a felony, or committing an act that could negatively affect Desi District's brand. Other non-curable breaches of the franchise agreement are those that cannot be cured by their nature. For MUDA agreements, non-curable defaults include failure to meet the development schedule or violating the franchise agreement or other agreement that gives Desi District the right to terminate it.
Upon termination or non-renewal, the franchisee must pay all amounts due, return the Manual and proprietary items, notify and transfer service for phone, internet, and other providers, cease doing business, remove identification, and allow Desi District the option to purchase the business.