If a Desi District franchisee borrows money, what are their obligations?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
nchise Group may charge $30 for any payment returned for insufficient funds (or, if such amount exceeds the maximum allowed by law, then the fee allowed by law).
- (e) Costs of Collection. Franchisee shall repay any costs incurred by Desi District Franchise Group (including reasonable attorney fees) in attempting to collect payments owed by Franchisee.
- (f) Application. Desi District Franchise Group may apply any payment received from Franchisee to any obligation and in any order as Desi District Franchise Group may determine, regardless of any designation by Franchisee.
- (g) Obligations Independent; No Set-Off. The obligations of Franchisee to pay to Desi District Franchise Group any fees or amounts described in this Agreement are not dependent on Desi District Franchise Group's performance and are independent covenants by Franchisee. Franchisee shall make all such payments without offset or deduction.
- (h) Taxes. Franchisee will be responsible for all sales taxes, use taxes, and other taxes imposed on the fees payable by Franchisee to Desi District Franchise Group or its affiliates and on services or goods furnished to Franchisee by Desi District Franchise Group or its affiliates, unless the tax is an income tax assessed on Desi District Franchise Group or its affiliates for doing business in the state where the Business is located.
ARTICLE 5. ASSISTANCE
- 5.1 Manual. Desi District Franchise Group shall make its Manual available to Franchisee.
- 5.2 Assistance in Hiring Employees. Desi District Franchise Group shall provide its suggested staffing levels to Franchisee. Desi District Franchise Group shall provide suggested guidelines for hiring employees. All hiring decisions and conditions of employment are Franchisee's sole responsibility.
- 5.3 Assistance in Training Employees. Desi District Franchise Group shall, to the extent it deems appropriate, provide programs for Franchisee to conduct training of new employees.
5.4 Pre-Opening Assistance.
- (a) Selecting Location. Desi District Franchise Group shall provide its criteria for Desi District locations to Franchisee. Desi District Franchise Group will review and advise Franchisee regarding potential locations submitted by Franchisee.
- (b) Pre-Opening Plans, Specifications, and Vendors. Within a reasonable period of time after the Effective Date, Desi District Franchise Group shall provide Franchisee with (i) Desi District Franchise Group's sample set of standard building plans and specifications and/or standard recommended floor plans; (ii) the applicable System Standards, (iii) other specifications as Desi
District Franchise Group deems appropriate (which may include specifications regarding inventory, supplies, materials, and other matters), and (iv) Desi District Franchise Group's lists of Approved Vendors and/or Required Vendors.
- (c) Business Plan Review. If requested by Franchisee, Desi District Franchise Group shall review and advise on Franchisee's pre-opening business plan and financial projections. Franchisee acknowledges that Desi District Franchise Group accepts no responsibility for the performance of the Business.
- (d) Pre-Opening Training. Desi District Franchise Group shall make available its standard pre-opening training to the Principal Executive and up to two additional team members, at Desi District Franchise Group's headquarters and/or at a Desi District business designated by Desi District Franchise Group. Desi District Franchise Group shall not charge any fee for this training. Franchisee is responsible for its own travel, lodging, meal, and other out-of-pocket expenses.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, the obligations of a Desi District franchisee who borrows money are detailed within the franchise agreement, particularly concerning payments and potential defaults. The franchisee is responsible for repaying any costs Desi District incurs while trying to collect payments owed by the franchisee, including reasonable attorney fees. Desi District has the authority to allocate payments received from the franchisee towards any obligation in any order it deems appropriate, irrespective of any designation made by the franchisee. The franchisee's obligation to pay fees or amounts is independent of Desi District's performance and must be made without any offset or deduction. Additionally, the franchisee is responsible for all sales, use, and other taxes imposed on fees payable to Desi District or its affiliates, as well as on services or goods furnished to the franchisee, unless it is an income tax assessed on Desi District or its affiliates for doing business in the state where the business is located.
If the franchisee defaults on their obligations, Desi District has several rights. They can demand cash on delivery for products or services, stop providing products and services, and request third-party vendors to cease selling or providing products or services to the franchisee. These actions do not constitute a breach of the agreement, and the franchisee remains responsible for all obligations under the agreement. Furthermore, if Desi District pays any amount the franchisee owes to a supplier or third party, the franchisee must reimburse Desi District plus a 10% administrative charge within 15 days of the invoice.
Additionally, if a franchisee fails to comply with system standards or the agreement and does not correct the issue after 30 days' notice, Desi District may charge a non-compliance fee of $500. Following this initial fee, Desi District can charge $250 per week until the non-compliance is resolved. This fee is considered a reasonable estimate of Desi District's internal costs and is not a penalty. These non-compliance fees are in addition to any other rights and remedies Desi District has, including default and termination under Section 14.2 of the agreement. These financial obligations and potential penalties underscore the importance of maintaining compliance and managing finances carefully as a Desi District franchisee.