When are the costs for a Business/Financial Audit due from an Afuri Ramen Dumpling franchisee?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
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| Type of Fee | Amount | Date Due | Remarks |
|---|---|---|---|
| Franchise Agreement Section 5.1). | |||
| Non-Cash Payment Systems | All costs associated with non-cash payment systems | As incurred | You must accept debit cards, credit cards, stored value gift cards or other non-cash payment systems we specify. |
| Manual Replacement Fee | $500 | On demand | You pay this fee if you lose the copy of the Operations Manual we loan to you. |
| Re-Inspection Fee | $500 per re-inspection | On demand | You pay this fee if we must re-visit your location for an inspection after you have already been notified of any deficiency or non satisfactory condition. |
| Liquidated Damages | An amount equal to two times the total Royalty Fees paid (or if unpaid, payable) by you during the 24 months before the termination date. | Within 30 days following the date of termination. | Payable if you default and we terminate your Franchise Agreement. |
| Sanitation and Food Safety Audits | Cost of the inspection | On demand | We may, in our sole discretion, contract with a third party to conduct sanitation and food safety audits during the term of your Franchise Agreement. |
| Business/Financial Audit7 | Our reasonable costs for the audit if you understate revenue by more than 2% or fail to deliver to us required reports on time | Immediately upon demand | See notes below. |
| Participation in Advisory Council | As incurred | As incurred | If you participate on an Advisory Council, you will pay any costs you incur related to your participation, such as travel and living expenses |
Source: Item 6 — Other Fees (FDD pages 11–16)
What This Means (2024 FDD)
According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, a franchisee is responsible for the costs associated with a Business/Financial Audit under specific circumstances. These costs are due "Immediately upon demand."
Afuri Ramen Dumpling will only charge these costs if the franchisee understates revenue by more than 2% or fails to deliver required reports on time. The costs cover the reasonable expenses Afuri Ramen Dumpling incurs for the audit.
This policy is fairly standard in franchising. Franchisors need accurate financial data to calculate royalties and advertising fees, and to assess the overall health of the franchise system. Franchisees should ensure they have strong accounting practices and submit all required reports accurately and on time to avoid triggering an audit and incurring these costs.