What costs and expenses related to inspections, audits, and re-inspections must a Casiola franchisee pay if they commit an Operations Violation?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
or expenses incurred in the operations of the Franchised Business or to any creditor of Franchisee for any products, materials, supplies or services purchased by the Franchised Business while it is managed by Franchisor's appointed manager.
- (4) Franchisee shall, at all times, maintain sufficient working capital to fulfill its obligations under this Agreement.
7.J. REMEDIES FOR NON-COMPLIANCE WITH OPERATIONAL STANDARDS
In addition to all other rights afforded to Franchisor under this Agreement, in connection with any, each, and every violation of any term, provision, and/or operational requirement as set forth in this Article 7 (an "Operations Violation"), within 14 days of Franchisor's invoice, Franchisee shall pay to Franchisor an operations non-compliance fee (the "Operations Non-Compliance Fee") in the amount of: (a) $1,000 for each and every instance/event related to an Operations Violation involving the sale of services and/or products that are not Approved Services and Products; (b) $1,000 for each and every instance/event related to an Operations Violation involving the failure to exclusively use System Supplies, and/or Franchisor designated suppliers; and (c) $500 for all other Operations Violation. Additionally, in each of the foregoing instances, within 14 days of Franchisor's invoice, Franchisee shall pay to Franchisor all costs and expenses
incurred by Franchisor in connection with any inspections, audits, and/or re-inspections directed and/or undertaken by Franchisor for the purpose, as determined by Franchisor in Franchisor's Reasonable Business Judgment, of determining whether or not Franchisee's Operations Violation has been cured in accordance with Franchisor's standards and specifications. The foregoing does not constitute Franchisor's consent to and/or acquiescence to Operations Violations.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to the 2024 Casiola Franchise Disclosure Document, if a franchisee commits an Operations Violation, they are responsible for covering all costs and expenses incurred by Casiola related to inspections, audits, and re-inspections. These inspections are conducted to determine if the franchisee has corrected the violation according to Casiola's standards. The franchisee must pay these costs within 14 days of receiving an invoice from Casiola.
In addition to covering the costs of inspections, audits, and re-inspections, Casiola franchisees must also pay an Operations Non-Compliance Fee for each violation. This fee is $1,000 for violations involving the sale of non-approved services or products, or the failure to exclusively use System Supplies and designated suppliers. For all other Operations Violations, the fee is $500 per violation. These fees are also due within 14 days of Casiola's invoice.
It is important to note that these remedies do not limit Casiola's other rights and remedies outlined in the agreement, including the right to terminate the agreement for violations. All rights and remedies available to Casiola are cumulative, meaning they can be exercised together. This means that a franchisee could face multiple penalties and still risk termination of their franchise agreement for failing to comply with operational standards.