What are the consequences for a Desi District franchisee who fails to comply with the franchisor's requirements for approved suppliers (Item 8), considering their general obligations outlined in Item 9?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
d parties, shall be honest and fair. Franchisee shall comply with any code of ethics or statement of values from Desi District Franchise Group. Franchisee shall not take any action which may injure the goodwill associated with the Marks.
ARTICLE 8. SUPPLIERS AND VENDORS
- 8.1 Generally. Franchisee shall acquire all Inputs required by Desi District Franchise Group from time to time in accordance with System Standards. Desi District Franchise Group may require Franchisee to purchase or lease any Inputs from Desi District Franchise Group, Desi District Franchise Group's designee, Required Vendors, Approved Vendors, and/or under Desi District Franchise Group's specifications. Desi District Franchise Group may change any such requirement or change the status of any vendor. To make such requirement or change effective, Desi District Franchise Group shall issue the appropriate System Standards.
- 8.2 Alternate Vendor Approval. If Desi District Franchise Group requires Franchisee to purchase a particular Input only from an Approved Vendor or Required Vendor, and Franchisee desires to purchase the Input from another vendor, then Franchisee must submit a written request for approval and any information, specifications and/or samples requested by Desi District Franchise Group. Desi District Franchise Group may condition its approval on such criteria as Desi District Franchise Group deems appropriate, which may include evaluations of the vendor's capacity, quality, financial stability, reputation, and reliability; inspections; product testing, and performance reviews. Desi District Franchise Group will provide Franchisee with written notification of the approval or disapproval of any proposed new vendor within 30 days after receipt of Franchisee's request.
- 8.3 Alternate Input Approval. If Desi District Franchise Group requires Franchisee to purchase a particular Input, and Franchisee desires to purchase an alternate to the Input, then Franchisee must submit a written request for approval and any information, specifications and/or samples requested by Desi District Franchise Group. Desi District Franchise Group will provide Franchisee with written notification of the approval or disapproval of any proposed alternate Input within 30 days after receipt of Franchisee's request.
- 8.4 Purchasing. Desi District Franchise Group may negotiate prices and terms with vendors on behalf of the System. Desi District Franchise Group may receive rebates, payments or other consideration from vendors in connection with purchases by franchisees. Desi District Franchise Group has the right (but not the obligation) to collect payments from Franchisee on behalf of a vendor and remit the payments to the vendor and to impose a reasonable markup or charge for administering the payment program. Desi District Franchise Group may implement a centralized purchasing system. Desi District Franchise Group may establish a purchasing cooperative and require Franchisee to join and participate in the purchasing cooperative on such terms and conditions as Desi District Franchise Group may determine.
What This Means (2024 FDD)
Based on the 2024 FDD, Desi District franchisees are obligated to acquire all required inputs in accordance with the System Standards, which may include purchasing or leasing inputs from Desi District, its designees, required vendors, or approved vendors, or under Desi District's specifications. Desi District retains the right to change these requirements or the status of any vendor by issuing updated System Standards. If a franchisee wishes to purchase a particular input from an alternate vendor when Desi District requires purchase from an approved or required vendor, the franchisee must submit a written request for approval with any necessary information, specifications, or samples. Desi District has 30 days to provide written notification of approval or disapproval, and may condition its approval on criteria such as evaluations of the vendor's capacity, quality, financial stability, reputation, and reliability, as well as inspections, product testing, and performance reviews.
Franchisees must comply with all mandatory obligations in the Manual and other System Standards at their own expense. This includes offering only the products and services prescribed by Desi District, making sales only to retail customers at the designated location, and providing high-quality products and services that meet or exceed customer expectations and System Standards. Desi District may also require franchisees to offer products and services at specific prices during national, regional, or local promotions, to the extent permitted by law.
While the provided excerpts outline the franchisee's obligations regarding suppliers and general operations, they do not explicitly detail the consequences of failing to comply with these requirements. A prospective franchisee should consult the franchise agreement within the FDD and directly ask Desi District about the specific penalties or remedies for non-compliance, which may include warnings, fines, termination of the franchise agreement, or other legal actions.