What happens if a Desi District franchisee refuses to cooperate with an audit by Desi District Franchise Group?

According to Desi District's 2024 Franchise Disclosure Document, a franchisee's refusal to cooperate with or permit any audit or inspection by Desi District Franchise Group or its agents or contractors is a breach of the franchise agreement. This also includes failing to comply with Section 10.5 or Section 11.2 of the agreement.

Section 10.5 gives Desi District the right to examine and audit all books and records related to the business at any reasonable time. Desi District can conduct the audit at the franchisee's location or require the franchisee to deliver copies of the necessary documents to a location designated by Desi District. Section 11.2 allows Desi District to enter the premises of the business during normal business hours to conduct inspections, which may include observing operations, conducting physical inventory, evaluating conditions, monitoring sales, speaking with employees/customers, and taking samples.

Refusing to comply with these sections gives Desi District grounds to terminate the franchise agreement, as detailed in Item 22. This means the franchisee could lose their business and the rights to operate under the Desi District brand. Franchisees should understand their obligations regarding audits and inspections to avoid potential termination of their franchise agreement.