If Dq Treat assists with lease negotiations, what does the Licensee acknowledge regarding representations or warranties made by Dq Treat or its affiliates?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
are reasonable and necessary to ensure continued public acceptance and patronage of DQ® restaurants and to avoid deterioration or obsolescence in connection with the operation of the business.
5.6 Lease.
- (A) To the extent that Company assists Licensee with any lease negotiations, Licensee acknowledges that Company or an affiliate:
- (1) has not made any representations or warranties to Licensee with respect to whether Company's or its affiliate's negotiation with the landlord will be successful, whether the lease terms or site are adequate or appropriate, nor that the Authorized Location will be ready for occupancy or opening by any specified date; and
- (2) neither Company nor an affiliate are responsible or liable to Licensee for damages arising out of any failure by Company or its affiliate to obtain the landlord's agreement to enter into a lease, the landlord's failure to enter into a lease with Licensee, or for the failure of the Authorized Location to be ready for occupancy or opening by any specified date.
- (B) If Licensee has signed a sublease for the Restaurant premises and Company or its affiliate and the landlord are unable to agree to a prime lease, Company may declare this agreement null and void, and all deposits, including the initial franchise fee, w
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, if Dq Treat assists a licensee with lease negotiations, the licensee acknowledges certain limitations regarding representations and warranties. Specifically, Dq Treat does not guarantee the success of negotiations with the landlord, nor does it warrant the adequacy or appropriateness of the lease terms or site. Furthermore, Dq Treat does not guarantee that the authorized location will be ready for occupancy or opening by any specified date.
This means that even if Dq Treat provides assistance, the franchisee bears the ultimate responsibility for evaluating the lease terms and site suitability. The franchisee also assumes the risk that the location may not be ready on time. This is a standard practice in franchising, as the franchisor's assistance is typically advisory, and the franchisee is the one entering into the lease agreement.
The FDD further clarifies that neither Dq Treat nor its affiliates are responsible or liable for damages arising from a failure to obtain the landlord's agreement to enter into a lease, the landlord's failure to actually enter into a lease with the franchisee, or the failure of the authorized location to be ready for occupancy or opening by a specific date. This underscores the importance of the franchisee conducting their own due diligence and not relying solely on Dq Treat's assistance or assurances.
In the event that the franchisee has signed a sublease and Dq Treat or its affiliate and the landlord cannot agree to a prime lease, Dq Treat has the right to declare the operating agreement null and void. In such a case, the franchisee will receive a refund of all deposits, including the initial franchise fee, minus a cancellation fee of $2,500 or Dq Treat's actual expenses incurred in processing the application and providing services, whichever is greater. This clause highlights a potential financial risk for the franchisee if the lease negotiations ultimately fail.