What is the maximum cumulative aggregate liability of GIFT'S to Dq Treat franchisees under the Participation Agreement?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
vided by GIFT, if the infringement or misappropriation would not have occurred but for such use or combination, or (iii) modifications or development requested by Client or Operated Locations, Participating Franchisee or Sub-Franchisee, using designs, instructions or specifications provided or approved by Client or Operated Locations, Participating Franchisee or Sub-Franchisee. Operated Locations, Participating Franchisee or Sub-Franchisee agrees to indemnify GIFT, its directors, officers, employees and agents from and against all third party claims, losses, liabilities and damages (including reasonable attorneys' fees and costs of settlement) resulting from or arising out of any allegation that materials supplied by Client or Operated Locations, Participating Franchisee or Sub-Franchisee (including trademarks, artwork, designs and specifications) misappropriate or infringe such third party's U.S. copyright, trademark, patent or other intellectual property right, except to the extent that such alleg
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 Dq Treat's 2025 Franchise Disclosure Document, GIFT'S liability to Dq Treat franchisees under the Participation Agreement is capped. Specifically, GIFT'S cumulative aggregate liability to the Client (DQ GC Inc.), Operated Locations, Participating Franchisees, and Sub-Franchisees will be limited to actual direct damages.
This liability will not exceed $3,000,000 in any event. Furthermore, this limit does not include any liability for claims arising out of or relating to the cards issued to Participating Franchisees from Client.
For a prospective Dq Treat franchisee, this means that while GIFT may be liable for direct damages, the maximum amount recoverable from GIFT by all participating parties (including the Client and other franchisees) is $3,000,000 in total. Any claims related to the cards issued to franchisees are excluded from this liability cap. This limitation of liability is a risk mitigation measure for GIFT, and franchisees should be aware of this cap when assessing potential risks and rewards associated with the Participation Agreement.