Who is responsible for construction cost overruns for a Dq Treat franchise?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
- 4. Acknowledgment: The undersigned acknowledges that ADQ's obligation under this agreement shall be limited to providing construction consultation services in concert with the project's selected general contractor and architect for the construction of, and installation of equipment, in the restaurant. ADQ is not responsible for the actual construction of the restaurant, installation of equipment therein, delays in construction, construction or architectural errors or omissions, cost overruns, change orders or any consequential costs, expenses, injuries or damages arising out of or relating to any of those events or conditions, or to the actual construction of, or installation of equipment in the restaurant. ADQ will not provide construction consultation services on projects that are not under contract with, and
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 franchisee, not American Dairy Queen (ADQ), is responsible for construction cost overruns. ADQ provides construction consultation services but explicitly states it is not liable for cost overruns or other construction-related issues. This means that if the actual cost of building or remodeling a Dq Treat location exceeds the initial budget, the franchisee must cover the additional expenses.
ADQ's role is limited to providing consultation in conjunction with the franchisee's selected general contractor and architect. This includes reviewing construction plans and progress, but it does not extend to managing the actual construction or ensuring compliance with building standards. The franchisee is responsible for ensuring the restaurant complies with all architectural, structural, and legal requirements.
This arrangement places significant financial risk on the Dq Treat franchisee. Cost overruns can arise from various factors, including unexpected site conditions, material price increases, or contractor errors. Franchisees should carefully vet their general contractor, establish a contingency fund, and closely monitor the construction budget to mitigate the risk of cost overruns. Understanding this allocation of responsibility is crucial for prospective franchisees to accurately assess the financial investment required to open a Dq Treat franchise.