Under what conditions will Afuri Ramen Dumpling conduct an audit at the franchisee's expense?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
- Audits. 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, Afuri Ramen Dumpling may audit a franchisee's financial records at any time during normal business hours. Generally, these audits are conducted at Afuri Ramen Dumpling's expense. However, the franchisee will be responsible for reimbursing Afuri Ramen Dumpling for all audit costs if specific conditions are met.
Specifically, Afuri Ramen Dumpling will require the franchisee to cover audit costs if the franchisee understates their Revenue for any reported period by more than 2%. Audit costs that the franchisee would be responsible for include charges from any independent accountant as well as travel expenses, room and board, and compensation for Afuri Ramen Dumpling's employees connected with the audit.
In addition to covering the audit costs, the franchisee must immediately pay all Royalty Fees, Advertising Fees, other fees, and late payment charges that the audit determines are owed. These payments do not waive any other remedies that Afuri Ramen Dumpling may have under the Franchise Agreement or by law. The franchisee will also be responsible for audit costs if they fail to deliver any required report of Revenue or any required financial statement in a timely manner.