Under what circumstances can either party immediately terminate the Dq Treat Participation Agreement due to a breach?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
- Either party has the right to terminate this Participation Agreement immediately in the event that the other party is guilty of a material breach of this Participation Agreement, and such breach remains uncured thirty (30) days following receipt of notice thereof.
GIFT will provide a copy of such notice of termination to Client.
- GIFT may terminate this Participation Agreement upon notice to Operated Locations, Participating 5.2 Franchisee or Sub-Franchisee: (i) if Operated Locations, Participating Franchisee or Sub-Franchisee or the Program causes GIFT 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; (ii) if Operated Locations, Participating Franchisee or Sub-Franchisee fails to pay any amount due within ten (10) days after receipt of notice; (iii) if GIFT determines, in its sole discretion, that a material adverse change has occurred in the financial condition of Operated Locations, Participating Franchisee or Sub-Franchisee; (iv) in whole or in part, in one or more jurisdictions, if the ACH Settlement Services cause GIFT or its Affiliated Processor 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 termina
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, either party can immediately terminate the Participation Agreement if the other party is guilty of a material breach, but only if the breach remains uncured 30 days after receiving notice. This means that if either Dq Treat or the franchisee violates a significant term of the agreement, the other party must first provide written notice and allow 30 days for the issue to be resolved. If the breach is not corrected within that timeframe, termination can then occur immediately.
Additionally, GIFT (presumably a third-party service provider) has specific rights to terminate the Participation Agreement under certain conditions. These include situations where the franchisee's actions cause GIFT to violate laws or regulations, failure to pay amounts due within ten days of notice, a material adverse change in the franchisee's financial condition, or if Dairy Queen instructs GIFT to terminate the agreement. These termination rights are designed to protect GIFT from legal and financial risks associated with the franchisee's operations.
Furthermore, the agreement can be immediately terminated if either party enters liquidation, receivership, bankruptcy, or undergoes a sale or transfer of substantially all assets. This clause protects both parties in the event of severe financial distress or a change in ownership that could impact their ability to fulfill the terms of the agreement. The FDD also states that termination or expiration of the Agreement results in immediate termination of the Participation Agreement with no notice required, and termination or expiration of the Franchise Agreement results in immediate termination of this Participation Agreement with respect to the Designated Locations covered by the termination.
For a prospective Dq Treat franchisee, this means understanding the specific actions or inactions that constitute a 'material breach' is crucial. It also highlights the importance of maintaining a sound financial condition and adhering to all applicable laws and regulations to avoid potential termination. Franchisees should seek clarification from Dq Treat regarding what constitutes a material breach and the specific procedures for providing and receiving notice of such breaches.