What costs will an Afuri Ramen Dumpling franchisee have to reimburse if an audit is conducted at their expense?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
Audits will be conducted at our expense unless you understate the Revenue for any reported period or periods by more than 2 percent or unless you fail to deliver any required report of Revenue or any required financial statement in a timely manner. In the event of an understatement or failure to deliver, you will reimburse us for all audit costs. These will include, among other things, the charges of any independent accountant and the travel expenses, room, board, and compensation of our employees incurred in connection with the audit. You will immediately pay all Royalty Fees, Advertising Fees, all other fees and late payment charges that the audit determines are owed. These payments will not prejudice any other remedies we may have under this Agreement or by law.
Source: Item 6 — Other Fees (FDD pages 11–16)
What This Means (2024 FDD)
According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, franchisees may have to cover the costs of audits under specific circumstances. Generally, Afuri Ramen Dumpling will cover the costs of auditing a franchise location. However, if a franchisee understates revenue by more than 2% for any reported period or fails to submit required revenue reports or financial statements on time, the franchisee will be responsible for reimbursing Afuri Ramen Dumpling for all audit costs.
The costs that the franchisee would be responsible for include the charges of any independent accountant involved in the audit. Additionally, the franchisee must reimburse Afuri Ramen Dumpling for travel expenses, room and board, and the compensation of Afuri Ramen Dumpling's employees who are involved in conducting the audit.
In addition to covering the audit costs, the franchisee is also responsible for immediately paying any Royalty Fees, Advertising Fees, other fees, and late payment charges that the audit determines are owed to Afuri Ramen Dumpling. It is important to note that these payments do not prevent Afuri Ramen Dumpling from pursuing other remedies available under the Franchise Agreement or by law.