What specific payment instructions must a Desi District franchisee comply with?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
4.7 Payment Terms.
(a) Method of Payment. Franchisee shall pay the Royalty Fee and any other amounts owed to Desi District Franchise Group by pre-authorized bank draft or in such other manner as Desi District Franchise Group may require. Franchisee shall comply with Desi District Franchise Group's payment instructions.
(b) Calculation of Fees. Franchisee shall report weekly Gross Sales to Desi District Franchise Group by Tuesday of the following week. If Franchisee fails to report weekly Gross Sales, then Desi District Franchise Group may withdraw estimated Royalty Fees equal to 125% of the last Gross Sales reported to Desi District Franchise Group, and the parties will true-up the actual fees after Franchisee reports Gross Sales. Franchisee acknowledges that Desi District Franchise Group has the right to remotely access Franchisee's point-of-sale system to calculate Gross Sales.
(c) Late Fees and Interest. If Franchisee does not make a payment on time, Franchisee shall pay a $100 "late fee" plus interest on the unpaid amount at a rate equal to 18% per year (or,
if such payment exceeds the maximum allowed by law, then interest at the highest rate allowed by law).
(d) Insufficient Funds. Desi District Franchise 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.
7.10 Payment Systems. Franchisee shall accept payment from customers in any form or manner designated by Desi District Franchise Group (which may include, for example, cash, specific credit and/or debit cards, gift cards, electronic fund transfer systems, and mobile payment systems).
Franchisee shall purchase or lease all equipment and enter into all business relationships necessary to accept payments as required by Desi District Franchise Group.
Franchisee must at all times comply with payment card industry data security standards (PCI-DSS).
- 7.11 Gift Cards, Loyalty Programs, and Incentive Programs. At its own expense, Franchisee shall sell or otherwise issue gift cards, certificates, or other pre-paid systems, and participate in any customer loyalty programs, membership/subscription programs, or customer incentive programs, designated by Desi District Franchise Group, in the manner specified by Desi District Franchise Group in the Manual or otherwise in writing.
Franchisee shall honor all valid gift cards and other pre-paid systems, regardless of whether issued by Franchisee or another Desi District business.
Franchisee shall comply with all procedures and specifications of Desi District Franchise Group related to gift cards, certificates, and other pre-paid systems, or related to customer loyalty, membership/subscription, or customer incentive programs.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, franchisees must adhere to specific payment protocols for both customer transactions and payments to Desi District itself. Franchisees are required to accept payments from customers in any form designated by Desi District, including cash, credit/debit cards, gift cards, electronic fund transfers, and mobile payment systems. To facilitate these transactions, franchisees must purchase or lease the necessary equipment and establish the required business relationships. Moreover, franchisees must comply with Payment Card Industry Data Security Standards (PCI-DSS) to ensure secure transaction processing. Desi District also mandates participation in gift card, loyalty, and incentive programs as specified in the manual. Franchisees must honor all valid gift cards, regardless of where they were issued, and follow all procedures related to these programs.
When it comes to payments to Desi District, franchisees must pay royalty fees and any other owed amounts via pre-authorized bank drafts or any other method that Desi District requires. Franchisees must also report weekly gross sales to Desi District by Tuesday of the following week. Failure to do so allows Desi District to estimate and withdraw royalty fees equal to 125% of the last reported gross sales, with a later reconciliation to determine the actual fees. Desi District retains the right to remotely access the franchisee's point-of-sale system to calculate gross sales.
Non-compliance with payment terms can result in financial penalties. Desi District may charge a $100 late fee, along with interest on the unpaid amount at a rate of 18% per year (or the maximum rate allowed by law). Additionally, a $30 fee may be charged for any payment returned due to insufficient funds (or the maximum legally permissible fee). Desi District also has the right to recover any costs incurred in collecting overdue payments, including reasonable attorney fees. Furthermore, Desi District has the discretion to apply any payment received from the franchisee to any outstanding obligation, irrespective of any designation made by the franchisee. These payment obligations are independent of Desi District's performance, and franchisees are not entitled to any set-offs or deductions. Franchisees are responsible for all sales, use, and other taxes on fees payable to Desi District, excluding income taxes assessed on Desi District itself.