What are the consequences for a Desi District franchisee who fails to comply with the franchisor's standards for cleanliness and maintenance (Item 9), considering the restrictions on suppliers (Item 8)?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
- 7.12 Maintenance and Repair. Franchisee shall at all times keep the Business in a neat and clean condition, perform all appropriate maintenance, and keep all physical property in good repair.
In addition, Franchisee shall promptly perform all work on the physical property of the Business as Desi District Franchise Group may prescribe from time to time, including but not limited to periodic interior and exterior painting; resurfacing of the parking lot; roof repairs; and replacement of obsolete or worn out signage, floor coverings, furnishings, equipment and décor.
Franchisee acknowledges that the System Standards may include requirements for cleaning, maintenance, and repair.
- 7.13 Remodeling. In addition to Franchisee's obligations to comply with all System Standards in effect from time to time, Desi District Franchise Group may require Franchisee to undertake and complete a Remodel of the Location to Desi District Franchise Group's satisfaction.
Franchisee must complete the Remodel in the time frame specified by Desi District Franchise Group.
Desi District Franchise Group may require the Franchisee to submit plans for Desi District Franchise Group's reasonable approval prior to commencing a required Remodel.
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.
ARTICLE 11. FRANCHISOR RIGHTS
- 11.2 Inspections. Desi District Franchise Group may enter the premises of the Business from time to time during normal business hours and conduct an inspection. Franchisee shall cooperate with Desi District Franchise Group's inspectors. The inspection may include, but is not limited to, observing operations, conducting a physical inventory, evaluating physical conditions, monitoring sales activity, speaking with employees and customers, and removing samples of products, supplies and materials. Desi District Franchise Group may videotape and/or take photographs of the inspection and the Business. Desi District Franchise Group may set a minimum score requirement for inspections, and Franchisee's failure to meet or exceed the minimum score will be a default under this Agreement. Without limiting Desi District Franchise Group's other rights under this Agreement, Franchisee will, as soon as reasonably practical, correct any deficiencies noted during an inspection. If Desi District Franchise Group conducts an inspection because of a governmental report, customer complaint or other customer feedback, or a default or noncompliance with any System Standard by Franchisee (including following up a previous failed inspection), then Desi District Franchise Group may charge all out-of-pocket expenses plus its then-current inspection fee to Franchisee.
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, franchisees must maintain a clean and well-repaired business location, adhering to system standards for cleaning, maintenance, and repair. Desi District can prescribe specific maintenance work, including interior and exterior painting, parking lot resurfacing, roof repairs, and replacement of worn items. Franchisees must also remodel their locations to Desi District's satisfaction within a specified timeframe, potentially requiring plan approval from Desi District before starting.
Desi District retains significant control over suppliers and inputs. Franchisees are required to acquire all necessary inputs according to system standards, potentially from Desi District, its designees, or approved vendors. Desi District can change these requirements and vendor statuses by issuing updated system standards. If a franchisee wants to use an alternate vendor or input, they must seek written approval from Desi District, which may involve evaluations of the vendor's capacity, quality, and financial stability.
Desi District also conducts inspections of the premises during business hours to ensure compliance. These inspections may involve observing operations, evaluating physical conditions, and speaking with employees and customers. Desi District can set minimum score requirements for inspections, and failure to meet these scores constitutes a default under the franchise agreement. Franchisees must correct any deficiencies noted during an inspection. If an inspection is triggered by a governmental report, customer complaint, or a previous failed inspection, Desi District may charge the franchisee for all out-of-pocket expenses plus an inspection fee. These factors combined mean that a franchisee's failure to maintain cleanliness and upkeep can lead to monetary penalties and potential termination of the franchise agreement.