What is the purpose of the Participation Agreement for Dq Treat locations regarding Punchh services?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
This Participation Agreement (this "Participation Agreement") is made effective as of the signature date of the Participating Location (as defined herein) below (the "Participation Agreement Effective Date") and is entered into by and between the undersigned franchisee entity (each, a "Participating Location") and Punchh Inc., with an address of 8383 Seneca Turnpike New Hartford, New York 13413 or Punchh (Canada) Inc. (collectively, "Punchh"); Punchh and Participating Location are sometimes referred to herein individually as a "Party" and collectively as the "Parties").
RECITALS
- A. American Dairy Queen Corp. and Dairy Queen Canada, Inc. (collectively, "Customer") and Punchh entered into a certain Master Services Agreement with an effective date of ______, as may be amended from time to time (the "Agreement").
- B. The Agreement contemplates the provision of certain products and services by Punchh to Participating Locations, including the execution of this Participation Agreement and the payment of applicable fees by Participating Locations that are not participating in the Dairy Queen® National Marketing Fund, in order to receive Punchh products and services for use of the Dairy Queen® loyalty program.
- C. The purpose of this Participation Agreement is to create a direct relationship between Punchh and Participating Locations to establish contractual privity and allow for direct billing, as applicable.
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, the Participation Agreement establishes a direct contractual relationship between Punchh Inc. and individual Dq Treat franchise locations ('Participating Locations') for the use of the Dairy Queen loyalty program. This agreement is necessary for Dq Treat locations to receive Punchh's products and services.
The Participation Agreement serves to create 'contractual privity' between Punchh and the Participating Locations. This allows Punchh to directly bill franchisees, where applicable. Specifically, Dq Treat franchisees that do not participate in the Dairy Queen National Marketing Fund are required to complete an ACH Authorization Form and Customer Information Form to facilitate direct debit payments to Punchh for loyalty platform fees, taxes, and other expenses.
For Dq Treat locations that do participate in the National Marketing Fund, the Customer (American Dairy Queen Corp. or Dairy Queen Canada, Inc.) will collect payments and remit them to Punchh. However, even for these locations, a Participation Agreement is required to ensure the franchisee's compliance with the terms and conditions of the agreement, particularly in the event of a breach. This arrangement clarifies that American Dairy Queen Corp. is generally not liable for the actions of Participating Locations, except for billing and remitting fees for those in the National Marketing program.
In summary, the Participation Agreement ensures that Dq Treat franchisees using Punchh's loyalty program are contractually bound to Punchh's terms, regardless of whether they are billed directly or through the National Marketing Fund. This agreement allows for direct billing where applicable and establishes clear lines of responsibility and liability between Punchh, the franchisees, and American Dairy Queen Corp.