What happens if the annual statement of Gross Revenue for a 1-800-GOT-JUNK? franchise discloses an overpayment of Royalties?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
Within ninety (90) days after the end of each calendar year, Franchisee shall submit to Franchisor (in electronic form whenever possible) the following financial information relating to the Franchised Business in respect of such calendar year, which information shall be certified as correct by Franchisee and prepared on a review engagement basis by a Certified Public Accountant retained by Franchisee at Franchisee’s sole cost and expense:
(a) a statement of Gross Revenue for such year as finally adjusted and reconciled after the close and review of Franchisee’s books and records for the year. If such statement discloses any underpayment of Royalties for such year, then Franchisee shall pay to Franchisor, at the time of submitting such statement, the amount of such underpayment. Any overpayment disclosed by such statement shall be credited to Franchisee’s Royalty account by Franchisor once verified and accepted by Franchisor;
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
According to the 2025 1-800-GOT-JUNK? Franchise Disclosure Document, franchisees are required to submit annual financial information to the franchisor within ninety days after the end of each calendar year. This information includes a statement of Gross Revenue, which must be certified as correct and prepared by a Certified Public Accountant at the franchisee's expense.
If the annual statement of Gross Revenue discloses an overpayment of royalties, 1-800-GOT-JUNK? will credit the overpayment to the franchisee's royalty account. However, this credit is contingent upon verification and acceptance of the overpayment by 1-800-GOT-JUNK?.
This process ensures that both 1-800-GOT-JUNK? and the franchisee have an accurate record of royalty payments. The franchisee bears the cost of the CPA's review, but also benefits from a system that allows for the reimbursement of overpaid royalties, subject to verification by the franchisor.