Is a Dq Treat conversion franchisee required to pay an initial franchise fee to the company?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
Company and Licensee are entering into the Agreement on the same date as this addendum and want to modify the Agreement as follows:
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- Section 2.3(A) of the Agreement is amended to include the following language at the end of the paragraph:
- except that Company agrees that, so long as the Agreement remains in effect, it will not operate or issue a license for any other party to operate a competing business using the Trademarks within the areas described as [complete with the protected territory description from the existing franchise agreement.]
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- Initial Franchise Fee. Section 9.1 of the Agreement is deleted. Licensee is not required to pay an initial franchise fee to Company.
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- Continuing License Fee. Section 9.2 of the Agreement is deleted and replaced with the following:
Source: Item 17 — The following paragraph is added to the end of Item 17 of the Disclosure Document: (FDD pages 70–378)
What This Means (2025 FDD)
According to the 2025 Dq Treat FDD, under certain addenda to the franchise agreement, a licensee may not be required to pay an initial franchise fee to the company. Specifically, Section 9.1 of the original agreement, which details the initial franchise fee, is deleted in its entirety. Instead, the addendum states that the licensee is not required to pay an initial franchise fee to Dq Treat. This waiver of the initial franchise fee is contingent upon the licensee and Dq Treat entering into the agreement on the same date as the addendum and adhering to the modifications outlined within the addendum.
This modification to the initial franchise fee requirement could significantly reduce the upfront costs for certain Dq Treat franchisees, making the franchise opportunity more accessible. However, it is crucial for prospective franchisees to understand the specific conditions under which this waiver applies. The addendum also modifies other sections of the agreement, such as those pertaining to continuing license fees and sales promotion program fees, which could impact the overall financial obligations of the franchisee.
It is important to note that this addendum is effective only on the effective date of the agreement and terminates upon the earlier of the transfer or termination of the agreement. Therefore, franchisees should carefully review the terms of the addendum and the underlying franchise agreement to fully understand their rights and obligations. Franchisees should also consult with legal and financial advisors to assess the potential impact of these modifications on their investment decision.