Under what circumstances will the Participation Agreement for a Dq Treat franchisee terminate if the Master Agreement is terminated for reasons other than convenience?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
ssor to violate any law or regulation and Operated Locations, Participating Franchisee or Sub-Franchisee or Client fails to cure the condition causing such violation within ten (10) business days after notice; (v) if GIFT is informed that Operated Locations, Participating Franchisee or Sub-Franchisee no longer operates as a franchisee of Client; or (vi) if Client instructs GIFT in writing to immediately terminate the Participation Agreement. GIFT will provide a copy of such notice of termination to Client. GIFT's obligation to provide the Services will be suspended during the cure periods referenced in clauses (i) and (iv).
- Either party may also terminate this Participation Agreement immediately in the event that the other 5.3 party shall go into liquidation, suffer the appointment of a receivership of its assets, go into bankruptcy, voluntarily or involuntarily, or otherwise take advantage of any insolvency laws, or upon any voluntary or involuntary sale, transfer, or other disposition of substantially all of the assets of the other party. GIFT will provide a copy of such notice of termination to Client.
- Termination of Agreement. Termination or expiration of the Agreement results in immediate termination of this Participation Agreement with no notice required.
- Termination of Franchise Agreement(s). Termination or expiration of Operated Location's, Participating Franchisee's or Sub-Franchisee's franchisee agreement(s) with Client ("Franchise Agreement") results in immediate termination of this Participation Agreement with respect to the Designated Locations covered by the terminated or expired Franchise Agreement, with no notice required.
- Exclusivity. During the Agreement term: (i) GIFT will be the sole and exclusive provider of the Services to Operated Locations, Participating Franchisee or Sub-Franchisee; and (ii) Operated Locations, Participating Franchisee or Sub-Franchisee will not, directly or indirectly, offer or promote any other proprietary, closed network, online gift card program. Nothing in the foregoing shall restrict or prohibit Operated Locations, Participating Franchisee or Sub-Franchisee from accepting any Visa, MasterCard, American Express, Discover or other universally accepted credit or debit card or from participating in any "open network" gift card program with other merchants. For purposes of clarification, a "closed network" program refers to a program in which a gift card is accepted only by the issuing merchant, and an "open network" program refers to a program in which a single gift card is accepted by more than one unaffiliated merchants.
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 will terminate immediately if the Franchise Agreement between the franchisee and Dq Treat is terminated or expires. No notice is required for this termination to take effect. This means that a Dq Treat franchisee's ability to participate in specific programs or services tied to the franchise agreement, such as gift card programs, will cease immediately upon the termination or expiration of their franchise agreement.
This condition is significant for prospective Dq Treat franchisees because it highlights the interconnectedness of the franchise agreement and any participation agreements. If the franchise agreement ends, so do the benefits and obligations under the participation agreement. This could impact the franchisee's revenue streams or operational capabilities if they rely heavily on the services provided through the participation agreement.
Additionally, the Participation Agreement can be terminated if either party is guilty of a material breach of the agreement, and the breach remains uncured 30 days after notice. GIFT (presumably a third-party service provider) may also terminate the Participation Agreement if the franchisee violates a law or regulation, fails to pay amounts due, experiences a material adverse change in financial condition, or if Dq Treat instructs GIFT to terminate the agreement. These termination rights provide GIFT and Dq Treat with mechanisms to protect their interests and ensure compliance with the terms of the Participation Agreement.
Furthermore, the Participation Agreement can be terminated immediately if either party goes into liquidation, suffers the appointment of a receivership of its assets, goes into bankruptcy, or undergoes a sale or transfer of substantially all of its assets. This clause protects both parties from potential losses or liabilities in the event of financial instability or significant changes in ownership or control. Prospective franchisees should carefully consider these termination conditions and their potential impact on their business operations and financial stability.