Are there Conversion Addenda included as part of the Dq Treat franchise agreements?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
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If you operate an existing Dairy Queen® soft-serve-only or limited non-system food ("NSF") store, and meet all of ADQ's qualifying criteria, ADQ may allow you to convert your store to a DQ® Treat store by signing the franchise agreement and the applicable conversion addendum included in Exhibit C. The conversion addenda allow you to, among other things, carry over from your old agreement to the new agreement the protected territory and the continuing license fee for products made with soft-serve as an ingredient. Franchisees converting an existing Dairy Queen® soft-serve-only store or an NSF store to a DQ® Treat store are referred to as "conversion franchisees" and the locations are referred to as "conversions."
Dairy Queen® soft-serve-only stores are different from the DQ® Treat franchise currently offered by ADQ because they are under franchise agreements entered into over 30 years ago and have no rights to carry DQ® food items.
Market
Dairy Queen® products appeal to the general public, although certain products are targeted for particular customers. Your principal competition will be other quick service and fast casual food
restaurants and specialty ice cream treat outlets, specialty fruit beverage (primarily smoothies), snack food, or treat establishments, including members of other regional and national chains and franchise systems. Sales of Dairy Queen® products may be seasonal in areas of the United States with cooler climates during part of the year. The market for quick service food restaurants, specialty ice cream treat outlets, and specialty fruit beverage, snack food and treat establishments is well developed and highly competitive.
Source: Item 22 — UItem 22U***:** U**Contracts (FDD page 67)
What This Means (2025 FDD)
According to the 2025 Dq Treat FDD, conversion addenda are included as part of the franchise agreement under specific conditions. If a franchisee operates an existing Dairy Queen soft-serve-only or limited non-system food (NSF) store and meets Dq Treat's qualifying criteria, Dq Treat may allow them to convert their current store to a Dq Treat store. This conversion involves signing the franchise agreement and the applicable conversion addendum, which is included in Exhibit C of the FDD. These addenda allow franchisees to carry over their protected territory and continuing license fee for soft-serve products from their old agreement to the new Dq Treat agreement.
The FDD specifies that franchisees converting from a Dairy Queen soft-serve-only store or an NSF store to a Dq Treat store are referred to as "conversion franchisees," and their locations are called "conversions." This distinction is important because Dairy Queen soft-serve-only stores operate under franchise agreements that are over 30 years old and do not have the rights to carry Dq Treat food items.
For prospective franchisees considering a conversion, the FDD also details the continuing license fee structure. If a conversion franchisee signs the soft-serve only conversion addendum, they will maintain their existing continuing license fee for DQ soft-serve products. However, they will also pay 5% of gross sales for all other products. If they sign the NSF conversion addendum, they will pay the same continuing license fee on soft-serve products as their existing DQ franchise agreement. Notably, these franchisees do not pay a continuing license fee on food menu products for the first 36 full months after the effective date. After this period, they will pay a continuing license fee of 5% of "Food Sales" minus "Base Food Sales," as defined in the conversion addendum.