Under what financial conditions can GIFT terminate the Dq Treat Participation Agreement?
Dq_Treat Franchise · 2025 FDDAnswer from 2025 FDD Document
thirty (30) days notice to Participating Franchisee or Sub-Franchisee.
- 4 Term. The "Term" begins when the Participation Agreement is signed by the parties and continues for so long as the Agreement is in effect, provided, however, that to the extent GIFT is required to provide commercially reasonable
support services following a termination of the Agreement, the provisions of this Participation Agreement shall remain in effect, but only to the extent necessary for GIFT to perform such services and for Operated Locations, Participating Franchisee or Sub- Franchisee to fulfill its obligations in connection with such services. Notwithstanding anything herein to the contrary, Participating Franchisee or Sub-Franchisee has the right to terminate this Participation Agreement, without cause and without any penalty fee, upon no less than sixty (60) days' prior written notice to GIFT, with a copy of such notice to Client.
5 Termination for Cause.
- 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;
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 Dq Treat's 2025 Franchise Disclosure Document, GIFT (First Data Resources, LLC) has specific financial grounds for terminating the Participation Agreement with a Dq Treat franchisee or sub-franchisee. GIFT can terminate the agreement if the franchisee fails to pay any amount due within ten days after receiving notice of non-payment. Additionally, GIFT can terminate the agreement if it determines, in its sole discretion, that a material adverse change has occurred in the financial condition of the Operated Locations, Participating Franchisee, or Sub-Franchisee.
These termination conditions carry significant implications for a prospective Dq Treat franchisee. The ten-day cure period for non-payment is relatively short, meaning franchisees must maintain diligent financial management to avoid potential termination. The clause regarding a 'material adverse change' in financial condition is particularly broad, granting GIFT considerable discretion. This could include factors like declining sales, increased debt, or other financial difficulties that GIFT deems significant.
It is important to note that GIFT will provide a copy of the termination notice to Client (DQ GC Inc.). Additionally, the agreement can be terminated if a party goes into liquidation, suffers the appointment of a receivership of its assets, goes 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.
Prospective Dq Treat franchisees should carefully evaluate their financial stability and ability to meet payment obligations promptly. They should also seek clarification from Dq Treat and GIFT regarding the specific criteria GIFT uses to determine a 'material adverse change' in financial condition to fully understand the risks associated with this clause. Understanding these financial termination conditions is crucial for any potential franchisee to ensure they can maintain the Participation Agreement and avoid potential disruptions to their business.