Are there any agreements between the Dq Treat licensee and the company's affiliates that the licensee remains liable for after termination?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
14.3 Liable for Obligations. Licensee remains liable for its obligations under any applicable lease or sublease for the Restaurant premises and Authorized Location, and its other applicable obligations under this agreement or any other agreement between Licensee and Company or Company's affiliates.
14.4 Amounts Owed. Licensee must pay all sums due to Company, its affiliates or designees, or that Licensee owes to third parties which have been guaranteed by Company or any of its affiliates, within 10 days of the termination or expiration of this agreement.
14.5 Purchase Option. Company may purchase or designate a third party to purchase any or all of the assets of the Restaurant that are owned by Licensee or any of Licensee's affiliates including the land, building, equipment, fixtures, signage, furnishings, supplies, leasehold, leasehold improvements, and inventory of the Restaurant, upon the following conditions:
(A) Company must give Licensee written notice of its intent to exercise its purchase rights under this section 14.5 within 30 days after the date of the expiration or termination of this agreement.
(B) The purchase will be at a price determined by a qualified appraiser paid for by Company and selected with the consent of both parties.
The price determined by the appraiser will be the reasonable fair market value of the assets based on their continuing use in, as, and for the operation of a DQ® Treat restaurant and the appraiser will designate a price for each category of asset (e.g., land, building, equipment, fixtures, etc. but not good will).
If the parties cannot agree upon an appraiser, either party may petition a judge of the United States district court for the district in which the Authorized Location is located to appoint an appraiser.
- (C) Within 45 days after Company's receipt of the appraisal report, Company must inform Licensee if Company or Company's designee intends to purchase any or all of the assets at the price in the appraisal report.
Company or its designated purchaser and Licensee must complete and close the purchase of the designated assets in a commercially reasonable time and manner.
Company may reduce the price paid for the assets by any unpaid portion of the termination fee due under section 13.2(D) of this agreement.
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, a licensee remains liable for obligations even after the termination of the franchise agreement. Specifically, the licensee is responsible for obligations under any applicable lease or sublease for the restaurant premises and authorized location. This also extends to other obligations under the franchise agreement or any other agreement between the licensee and Dq Treat or its affiliates. This means that even after the franchise relationship ends, the franchisee could still be legally and financially responsible for certain aspects of the business.
Furthermore, the Dq Treat franchisee must pay all sums due to the company, its affiliates, or designees within 10 days of the termination or expiration of the agreement. This includes any amounts the franchisee owes to third parties that have been guaranteed by Dq Treat or its affiliates. This provision ensures that Dq Treat and its affiliates are promptly compensated for any outstanding debts or financial obligations related to the franchise.
Additionally, Dq Treat retains the option to purchase the assets of the restaurant upon termination or expiration of the agreement. This includes assets owned by the licensee or any of the licensee's affiliates, such as land, building, equipment, fixtures, signage, furnishings, supplies, leasehold improvements, and inventory. Dq Treat must provide written notice of its intent to purchase within 30 days of termination or expiration, and the purchase price will be determined by a qualified appraiser. This clause gives Dq Treat significant control over the future of the restaurant location and its assets after the franchise agreement ends.