If Exit or the Subfranchisor identifies deficiencies during an inspection, what is the Exit franchisee required to do?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Subfranchisor and EXIT shall have the right at any reasonable time to enter Franchisee's places of business and to inspect, review and verify Franchisee's corporate (or partnership or limited liability entity), business and banking records in order to determine Franchisee's compliance with this Agreement, the truthfulness of all statements and disclosures to EXIT or Subfranchisor, and for conformity with all standards, specifications, procedures and techniques of the EXIT System. Franchisee shall cooperate with the inspections, will render such assistance as may be requested, and will promptly remedy all deficiencies identified by EXIT or Subfranchisor, whether or not they are identified in a formal notice of default or notice to cure.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, franchisees must cooperate with inspections conducted by Exit or the subfranchisor. This includes providing assistance as requested and promptly addressing any deficiencies that Exit or the subfranchisor identifies. This requirement applies regardless of whether the deficiencies are formally communicated through a notice of default or a notice to cure.
This obligation ensures that Exit franchisees maintain the standards, specifications, procedures, and techniques of the Exit system. By promptly remedying identified issues, franchisees contribute to the overall consistency and quality of the brand. This also helps to maintain the integrity of the Exit System and prevent duplication of the System.
For a prospective franchisee, this means being prepared for regular inspections and audits by Exit or the subfranchisor. It is crucial to have systems in place to quickly address any shortcomings identified during these inspections to avoid potential penalties or further action from the franchisor. This also highlights the importance of understanding and adhering to Exit's standards and procedures from the outset.