How many times can a Dryject franchisee fail to submit financial statements before being in breach?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
ief Financial Officer, who shall attest that the statement is true and correct and prepared in accordance with Our requirements.
You shall also submit to Us Your current financial statement and other forms, records, reports, information and data as We may reasonably designate, in the form, and at the times and the places reasonably required by Us, upon request, and as specified from time to time in the Operations Manual or otherwise in writing.
- (c) You shall permit Our authorized personnel to inspect, examine, compile, review and/or audit all of Your business records relating to Your Franchised Business, including but not limited to financial documents and tax returns, at any time during normal business hours without any prior notice.
- (d) You shall also permit accountants designated by Us to audit Your books of accounts. In the event that We find that You have understated the amount due to Us and that any such understatement has been made deliberately, such understatement shall constitute an Event of Default and be considered a Material Breach of this Agreement as defined in Section 32(d)(iv) of this Agreement.
Source: Item 8 — BUSINESS RELATIONSHIP (FDD pages 68–229)
What This Means (2025 FDD)
According to the 2025 Dryject FDD, a franchisee is required to submit current financial statements and other forms, records, reports, information, and data as reasonably designated by Dryject. These submissions must be in the form, at the times, and in the places reasonably required by Dryject, upon request, and as specified from time to time in the Operations Manual or otherwise in writing.
The FDD does not specify a particular number of failures to submit financial statements that would constitute a breach of the agreement. However, the FDD states that if an audit reveals an understatement of five percent (5%) or more of the amount otherwise due to Dryject, or if the understatement is determined to be deliberate, it will constitute an Event of Default and be considered a Material Breach of the Agreement.
Given the lack of a specific number, a prospective Dryject franchisee should clarify with the franchisor what constitutes a failure to submit financial statements and how many instances of failure are allowed before it is considered a breach of contract. Understanding the specific policies and procedures outlined in the Operations Manual regarding financial reporting is crucial to avoid potential defaults.