Under what conditions will Desi District require a Multi-Unit Development Agreement (MUDA) to be signed?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
You do not have the right to establish additional franchised outlets unless you sign a Multi-Unit Development Agreement ("MUDA") in the form attached as Exhibit C to this disclosure document. If you and we sign a MUDA, then you will have the right to establish a mutually-agreed number of additional outlets on a mutually-agreed schedule. Under the MUDA, your right to develop additional outlets is subject to (1) you must comply with the mutually-agreed development schedule, (2) you must have sufficient financial and organizational capacity to develop, open, operate, and manage each additional Desi District business, (3) you must be in compliance with all brand requirements at your open Desi District business(es), and (4) you must not be in default under any other agreement with us. We will approve the location of future sites and territories for those sites, and our then-current standards for sites and territories will apply. You are not obligated to develop additional outlets under the MUDA, and you may terminate it any time without penalty. If you do not meet your development schedule in the MUDA, we have the right to terminate your right to develop additional outlets.
Source: Item 5 — INITIAL FEES (FDD pages 15–16)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, a Multi-Unit Development Agreement (MUDA) is required if a franchisee wants to open more than one Desi District location. The FDD states that franchisees do not have the right to establish additional franchised outlets unless they sign a MUDA.
If a franchisee and Desi District sign a MUDA, the franchisee gains the right to establish an agreed-upon number of additional outlets based on a mutually agreed schedule. However, this right is contingent upon several factors. The franchisee must adhere to the development schedule, possess sufficient financial and organizational capacity to manage each additional Desi District business, comply with all brand requirements at their existing Desi District businesses, and avoid defaulting on any agreements with Desi District.
The franchisor retains approval rights over the locations and territories for future sites, ensuring they meet the then-current standards. While the franchisee isn't obligated to develop additional outlets under the MUDA and can terminate it without penalty, Desi District has the right to terminate the franchisee's development rights if the development schedule isn't met. The initial franchise fees are reduced to $30,000 for the second and each additional franchise, and all franchise fees are payable upon signing the MUDA.