Under what conditions does an Afuri Ramen Dumpling franchisee pay for a Business/Financial Audit?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Date Due | Remarks |
|---|---|---|---|
| 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. |
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- 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, franchisees may be required to cover the costs of a business/financial audit under specific circumstances. Afuri Ramen Dumpling retains the right to audit a franchisee's financial records, and while these audits are typically conducted at the company's expense, the franchisee becomes responsible for the costs if certain discrepancies or failures are identified. Specifically, the franchisee will bear the audit costs if they understate their revenue by more than 2% for any reported period.
Additionally, the franchisee is responsible for audit costs if they fail to deliver required reports of revenue or any required financial statements in a timely manner. In these instances, the franchisee must reimburse Afuri Ramen Dumpling for all audit-related expenses. These expenses encompass charges from independent accountants, as well as travel, lodging, and compensation for Afuri Ramen Dumpling's employees involved in the audit.
Furthermore, if an audit reveals that the franchisee owes additional Royalty Fees, Advertising Fees, or other fees, along with late payment charges, the franchisee is obligated to make immediate payment. It is important to note that these payments do not preclude Afuri Ramen Dumpling from pursuing other remedies available under the Franchise Agreement or by law. This policy incentivizes accurate financial reporting and timely submission of required documents by Afuri Ramen Dumpling franchisees.