How many instances of understating Gross Revenue will result in a default for a Devon Creek franchisee?

Based on the 2024 Devon Creek Franchise Disclosure Document, the document does not specify a particular number of instances of underreporting gross revenue that would lead to a franchisee's default. However, it does state that if a franchisee fails to timely report Gross Revenue, Devon Creek has the right to collect 120% of the last Royalty Fee payable, in addition to late fees and interest.

Item 6.1.3 of the FDD outlines the Gross Revenue reporting requirements. Devon Creek franchisees must furnish the franchisor with a Gross Revenue Report weekly on Wednesdays for the prior week. This report must be in a form and contain information as Devon Creek may prescribe from time to time. The report may need to be submitted via electronic transfer of data via the Computer System that Devon Creek requires the franchisee to use.

Item 6.1.4 states that along with the Gross Revenue Report, the franchisee must pay the Royalty Fee and Brand Development Fund Contribution. The franchisee may be required to allow Devon Creek to automatically take the Royalty Fee and Brand Development Fund Contribution due, as well as other sums due Devon Creek, from business bank accounts via electronic funds transfers. Failure to allow electronic funds transfers on an ongoing basis is a material breach of the agreement.

Since the FDD does not specify the number of instances of underreporting that would result in default, it is important for a prospective franchisee to clarify with Devon Creek the specific policies and procedures regarding reporting revenue and the consequences of failing to accurately report gross revenue.