How is the non-compliance cure costs and fee calculated for a Desi District franchise?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
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| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Special inspection fee | Currently $600, plus our out-of-pocket costs | On demand | Payable only if we conduct an inspection of your business because of a governmental report, customer complaint or other customer feedback, or your default or non-compliance with any system specification. |
| Non-compliance cure costs and fee | Our out-of-pocket costs and internal cost allocation, plus 10% |
Source: Item 6 — OTHER FEES (FDD pages 16–20)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, if a franchisee is non-compliant with the franchise agreement, Desi District may take action to correct the non-compliance on the franchisee's behalf. An example provided in the FDD is if the franchisee does not have the required insurance, Desi District may purchase it for them.
The non-compliance cure costs and fee is calculated as Desi District's out-of-pocket costs and internal cost allocation, plus 10%. This 10% is an administrative fee charged on top of the costs incurred by Desi District to rectify the franchisee's non-compliance.
The fee is due when billed to the franchisee. It is important for prospective franchisees to understand what constitutes non-compliance under the franchise agreement and to maintain compliance to avoid these additional costs. Franchisees should clarify with Desi District what specific actions might trigger this clause and how costs are allocated to ensure they are prepared for such a situation.