Does paying outstanding fees after an audit preclude Afuri Ramen Dumpling from pursuing other remedies?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
We may audit your reports, books, statements, business records, cash control devices, and tax returns at any time during normal business hours. 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, if an audit reveals that a franchisee has understated revenue or failed to deliver required reports on time, the franchisee is responsible for reimbursing Afuri Ramen Dumpling for all audit costs. These costs encompass charges from independent accountants, as well as travel expenses, room, board, and compensation for Afuri Ramen Dumpling's employees involved in the audit.
Furthermore, the franchisee is obligated to immediately pay all Royalty Fees, Advertising Fees, other fees, and late payment charges that the audit determines are owed. Importantly, the FDD states that these payments do not prevent Afuri Ramen Dumpling from pursuing any other remedies available under the Franchise Agreement or by law.
This means that even if a franchisee pays all outstanding fees and reimburses audit costs, Afuri Ramen Dumpling retains the right to take further action if the franchisee has violated the Franchise Agreement. This could include actions such as demanding specific performance, seeking damages, or even terminating the franchise agreement, depending on the nature and severity of the violation.