May Afuri Ramen Dumpling obtain benefits from entities with whom a franchisee does business?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
- 1.1.4 Co-Branding. Some Afuri franchises may be placed at a location where another, separate business is operated under another business name. If the Franchise Premises is at that type of location, it will be deemed "co-branded" for the purposes of this Agreement. If the Franchise Premises is located in a co-branded location, the exact basis and calculation of Revenue will follow the requirements and procedures we outline in the Operations Manual. If the Franchise Premises is in a co-branded location, you will obtain and keep, or make arrangements for us to have access to, a complete and accurate set of books and records of the operation of all businesses operated at and all business done through the cobranded location, although Revenue will be limited to Afuri related receipts. If the Franchise Premises is located in a co-branded location, we may enter upon the Franchise Premises at reasonable times to interview co-branded partners and to inspect and copy any books, records and documents related to the co-branded location in order to verify your compliance with the terms of the Franchise Agreement. The Operations Manual may contain additional information about co-branded locations.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
Based on the 2024 Afuri Ramen Dumpling Franchise Disclosure Document, the franchise agreement addresses scenarios where an Afuri Ramen Dumpling franchise operates at a location with another business, termed "co-branding." In such cases, the franchisor, Afuri Ramen Dumpling, requires access to the financial records of all businesses operating at the co-branded location, although revenue calculation is limited to Afuri-related receipts. This access allows Afuri Ramen Dumpling to verify the franchisee's compliance with the franchise agreement terms.
Specifically, Afuri Ramen Dumpling needs to ensure that the franchisee accurately reports Afuri-related revenue and adheres to the operational standards outlined in the Operations Manual for co-branded locations. The franchisee must maintain complete and accurate books and records for all businesses at the co-branded location and provide access to these records for inspection and copying by Afuri Ramen Dumpling. This enables the franchisor to audit the franchisee's operations and financial performance in the co-branded setting.
This arrangement allows Afuri Ramen Dumpling to monitor and potentially benefit from the overall business activity at the co-branded location by ensuring accurate revenue reporting and adherence to franchise terms. However, the direct revenue calculation remains limited to Afuri-related receipts, suggesting that the primary benefit for Afuri Ramen Dumpling is in maintaining brand standards and accurate financial reporting rather than directly profiting from the other business's revenue. A prospective franchisee should clarify with Afuri Ramen Dumpling the specific procedures and requirements for revenue calculation and reporting in co-branded locations to fully understand the financial implications.