For Dq Treat, what is the length of the initial term of the agreement, assuming no orders are in effect?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
4. TERM AND RENEWAL.
- 4.1 Term. The term of this agreement starts on the Effective Date and, unless earlier terminated under section 13, runs for:
- (A) 15 years after the target opening date, as determined by Company, if for a new DQ Treat franchise;
- (B) The lesser of 15 years or the remaining term of the transferring licensee's operating agreement, if this agreement is signed as a requirement of a transfer; or
- (C) The renewal term specified in the expiring operating agreement, if this agreement is signed as a requirement of renewal
- 4.2 Expiration Date. Company will designate the expiration date of this agreement on the cover page and the date designated by Company shall control.
- 4.3 Renewal. If the following conditions are met, Licensee may renew its license for an additional renewal term, which will be the shorter of 15 years or the period that Licensee has the right to maintain possession of the Restaurant premises:
- (A) Licensee gives Company written notice of its intent to renew between 3 6 months before the expiration of the term;
- (B) Licensee signs Company's then current operating agreement. The terms of the then current operating agreement may differ materially from this agreement, including higher or additional fees;
- (C) Licensee has complied with the modernization and replacement provisions of section 5.5;
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 Franchise Disclosure Document, the initial term of the operating agreement depends on whether it is a new franchise, a transfer, or a renewal. For a new Dq Treat franchise, the term is 15 years after the target opening date as determined by the company. If the agreement is signed as part of a transfer, the term is the lesser of 15 years or the remaining term of the transferring licensee's operating agreement. For a renewal, the term is the renewal term specified in the expiring operating agreement. The company will designate the expiration date on the cover page of the agreement, and that date will be controlling.
It is important to note that the agreement can be terminated earlier under Section 13 of the agreement. The franchisee also has the option to renew the license for an additional term if certain conditions are met, including giving written notice, signing the current operating agreement, complying with modernization provisions, being in good standing, maintaining possession of the restaurant premises, and paying a renewal fee. The renewal term will be the shorter of 15 years or the period the franchisee has the right to maintain possession of the restaurant premises.
Prospective franchisees should carefully review Section 4 of the Dq Treat operating agreement to fully understand the term and renewal conditions. Understanding these terms is crucial for long-term planning and financial forecasting. Franchisees should also be aware of the conditions under which the agreement can be terminated early, as this could have significant financial implications.