Can Desi District apply payments received from a franchisee to any obligation and in any order?

According to the 2024 Desi District Franchise Disclosure Document, Desi District Franchise Group has the right to allocate payments received from a franchisee towards any outstanding obligation in any order they deem appropriate. This means that Desi District is not obligated to apply payments in a way that the franchisee might prefer or designate.

This provision gives Desi District significant control over how franchisee payments are applied, potentially to the detriment of the franchisee. For example, if a franchisee owes both franchise fees and marketing contributions, Desi District could choose to apply a payment to the obligation with the highest interest or the one that puts the franchisee most at risk of default, regardless of the franchisee's preference.

Franchisees should be aware of this clause and its potential implications for their financial relationship with Desi District. It is crucial to maintain detailed records of all payments and outstanding obligations to ensure transparency and to be able to track how Desi District applies the payments. Franchisees may want to seek clarification from Desi District regarding their typical payment application practices to better understand how this clause might be implemented in practice.