What rights does the Dq Treat Company reserve regarding the operation of competing businesses?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
ensee that all pre-opening requirements have been met. Company is not liable for any damages arising out of Licensee's failure to open the Restaurant by a particular date.
- 2.3 Limited License. The license granted by this agreement is limited to the right to operate one Restaurant at the Authorized Location, and does not include:
- (A) An exclusive area or protected territory within which Company or its affiliates agree not to issue competing franchises or operate competing businesses;
- (B) Any right to sell or distribute products and menu items identified by the Trademarks at any location other than the Authorized Location or through any other channels or methods of distribution, including the internet (or any other existing or future form of electronic commerce such as social media, mobile applications, third party delivery and other platforms and the metaverse) and pre-packaged retail or catalog sales, except as Company may authorize or require as part of the System;
- (C) Any right to sell or distribute products and menu items identified by the Trademarks to any person or entity for resale or further distribution, except as Company may authorize or require as part of the System; or
- (D) Any right to sublicense, or exclude, control or impose conditions on the location or development of future restaurants or stores.
- 2.4 Reservation of Rights. Company reserves all rights not expressly granted to Licensee under this agreement. Company and its affiliates have the right to operate and grant others the right to operate competing businesses at any location but the Authorized Location, as determined by Company or its affiliates. These locations may include freestanding buildings and facilities, strip centers, shopping malls, and other similar locations. These locations also may include transportation terminals, sports facilities, recreation areas, hotels, hospitals, campus facilities, and other non-traditional locations.
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, Dq Treat retains significant rights regarding competing businesses. Specifically, the franchise agreement does not grant franchisees an exclusive area or protected territory. This means that Dq Treat and its affiliates are not restricted from issuing competing franchises or operating competing businesses near a franchisee's location.
This lack of territorial exclusivity has important implications for prospective franchisees. It means that Dq Treat could potentially open another location nearby, which could directly compete with an existing franchisee's business and impact their revenue. This is a risk that franchisees must consider, as market saturation could affect their profitability.
Furthermore, the agreement specifies that the license granted to a franchisee is limited to operating one restaurant at the authorized location. This explicitly excludes any right to sell or distribute products identified by Dq Treat's trademarks at any other location or through other channels, such as online sales or pre-packaged retail, unless specifically authorized by Dq Treat. This restriction ensures that Dq Treat maintains control over its brand and distribution channels, preventing franchisees from expanding their sales beyond the approved restaurant location without permission.
Dq Treat also reserves the right to modify the System in any way not explicitly prohibited by the agreement and will be deemed to have satisfied its obligations as long as it exercises reasonable business judgment. This judgment can be deemed reasonable even if it benefits the franchise system or Dq Treat, even if it also promotes a financial or other individual interest of Dq Treat. This includes actions intended to enhance the value of the trademarks, improve customer service, product quality, uniformity, modernization, or the competitive position of the franchise system.