Under what conditions can the Dq Treat agreement be assigned or transferred?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
intentional misstatements made to a
proposed transferee. Any information furnished by Company to proposed transferees is for the sole purpose of permitting the transferees to evaluate the Restaurant and proposed transfer and will not be construed in any manner or form whatsoever as financial performance representations or claims of success or failure.
- (L) Then Current Operating Agreement. Transferee must sign Company's then current operating agreement, which may have materially different terms and conditions, including higher or additional fees.
- (M) Facility Items and Modernization. Licensee must complete the repairs, maintenance, and other similar items at the Restaurant that Company specifies in writing. In addition, if Licensee has not completed a modernization under section 5.5 in the past 10 years, then Licensee must complete the modernization prior to the effective date of the transfer. If Licensee has completed a modernization under section 5.5 in the past 10 years, then transferee will be required to complete the next modernization by the date Licensee would have been required to modernize under this agreement.
- (N) Transfer Agreement. Licensee (and each Owner) must sign an agreement, in form satisfactory to Company, in which Licensee and each Owner covenant to observe the post-termination covenant not to compete and all other applicable post-termination obligations described in this agreement.
- (O) Other Conditions. Company may expand upon, and provide more details related to, the conditions for transfer and our consent as described in this Section 11.3, and may do so in the Operations Manual or otherwise in writing. Licensee and each transferee must comply with any other conditions that Company reasonably requires periodically as part of its transfer procedures.
- 11.4 Consent Not Unreasonably Withheld. As long as Licensee and transferee meet Company's applicable requirements for a transfer, Company will not unreasonably withhold consent for the transfer.
- 11.5 Transfer Void. Any attempted transfer by Licensee without Company's prior written consent or otherwise not in compliance with the terms of this agreement is void and gives Company the right at its option to either default and terminate this agreement, or to consent to the transfer and collect from Licensee and the guarantors a transfer fee equal to two times the transfer fee provided for in section 11.3(E)(1).
- 11.6 Transfer by Company. Company can transfer, in whole or in part, its interest in this agreement without Licensee's consent. Following the effective date of any assignment, Licensee will look solely to the transferee or assignee,
and not to Company, for the performance of all obligations under this agreement.
12. DISPUTE RESOLUTION.
- 12.1 Arbitration. Subject to section 12.2, any dispute between Licensee and Company, or any of their affiliates, arising under, out of, in connection with or in relation to this agreement, any lease or sublease for the Restaurant or Authorized Location, the parties' relationship, or the Restaurant must be submitted to binding arbitration under the authority of the Federal Arbitration Act ("FAA"). Any state laws attempting to prohibit arbitration or void out of state forums for arbitration are preempted by the FAA. The dispute must be arbitrated in accordance with the then current rules and procedures and under the auspices of the American Arbitration Association ("AAA"), except to the extent the rules and procedures are modified below.
- (A) The then-current AAA Large, Commercial Case Rules apply where the matter in controversy in the arbitration proceeding is at least $500,000. The matter in controversy is defined not only by the amount of the demand, but also by the value of the matter to the parties to the arbitration. The AAA will decide the amount of the matter in controversy, subject to a challenge of the AAA decision by either party to the arbitrator(s).
- (B) The arbitrator(s) has the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim. The arbitrator(s) has the power to determine the existence or validity of a contract of which an arbitration clause forms a part. Such an arbitration clause will be treated as an agreement independent of the other terms of the contract.
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, a licensee can transfer their operating agreement if they meet certain conditions. The transferee must sign the then-current operating agreement, which may have materially different terms and conditions, including higher or additional fees. The licensee must complete any repairs, maintenance, and other similar items at the Restaurant that Dq Treat specifies in writing. If the licensee hasn't completed a modernization within the past 10 years, they must do so before the transfer. Otherwise, the transferee will need to complete the next modernization by the date the licensee would have been required to under the original agreement.
Licensees (and each Owner) must sign an agreement to observe the post-termination covenant not to compete and all other applicable post-termination obligations. Dq Treat may expand upon the conditions for transfer and their consent in the Operations Manual or in writing, and both the licensee and transferee must comply with any other conditions Dq Treat reasonably requires as part of its transfer procedures. As long as the licensee and transferee meet Dq Treat's requirements, Dq Treat will not unreasonably withhold consent for the transfer.
Any transfer attempted without Dq Treat's prior written consent or not in compliance with the agreement's terms is void. In such cases, Dq Treat has the option to either terminate the agreement or consent to the transfer and collect from the licensee and guarantors a transfer fee equal to two times the standard transfer fee. Dq Treat, however, can transfer its interest in the agreement without the licensee's consent. After such a transfer, the licensee must look solely to the new transferee or assignee for obligations.
Additional conditions include paying all amounts owed to Dq Treat, its affiliates, suppliers, or the landlord. The licensee must be in full compliance with the agreement, including providing all required reports through the effective date of the transfer. All owners of the transferee must sign Dq Treat's current form of undertaking and guarantee. Licensees, each owner, and each guarantor must sign a general release of all claims related to the agreement, the restaurant, or the business relationship, in a form designated by Dq Treat, releasing Dq Treat and its affiliates. The transferee must also comply with Dq Treat's current training requirements for DQ® Treat restaurants at their own expense. Dq Treat may also require the licensee to provide financial reports and data to the transferee or Dq Treat to evaluate the restaurant and the proposed transfer. The transfer fee increases by $500 on January 1, 2025, and every 5 years thereafter. If Dq Treat exercises its right of first refusal or does not consent to the transfer, the transfer fee will be returned to the licensee, minus any actual expenditures made by Dq Treat in evaluating the transfer, along with an itemized statement of costs.