Does Desi District have an obligation to collect payments from Franchisee on behalf of a vendor?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, Desi District does not have an obligation to collect payments from franchisees on behalf of a vendor. However, Desi District has the right, but not the obligation, to collect payments from a franchisee on behalf of a vendor and remit those payments to the vendor. Desi District can also impose a reasonable markup or charge for administering this payment program.
This means that as a Desi District franchisee, you might encounter a system where Desi District collects payments for vendor purchases. This could streamline the payment process, but it also gives Desi District the ability to add a markup to these payments. Franchisees should clarify with Desi District the specifics of any vendor payment programs, including which vendors are included, the amount of any markup, and the procedures for payment and reconciliation.
Desi District also retains the right to negotiate prices and terms with vendors on behalf of the entire system and may receive rebates, payments, or other consideration from vendors related to franchisee purchases. Desi District may implement a centralized purchasing system or establish a purchasing cooperative that franchisees may be required to join.