What must Aira Fitness franchisees do regarding tax returns and informational statements?

xample, sales tax), you will reimburse us the amount of those taxes, fees, or assessments within fifteen (15) days after receipt of our written notice to you.

10. REPORTING AND AUDIT RIGHTS

A. Accounting and Record Keeping.Franchisee shall use the bookkeeping, accounting, and record keeping system prescribed by us and submit to us such periodic reports, forms, and records as specified, and in the manner and at the time specified, in the Operations Manual. To ensure uniform financial statements are submitted by you, we reserve the right to require you to use a standard Chart of Accounts for tracking income and expense items for the Aira Fitness Business and the right to require you to have a fiscal year-end of December 31. For a period of five (5) years from their date of preparation, you will keep on file at your principal office and make available to the us all such records, including, without limitation, the following: receipts, invoices, payroll records, check stubs, bank deposit receipts, sales tax records and returns, business and personal tax returns, and such journals and transactions which properly summarize the transactions of the business operations of the Aira Fitness Business. You hereby grant permission to us to have access to all electronic records maintained in Technology Systems that we require you to use.

• B. Reporting**.** You shall furnish to us on the first day of each calendar month a report of the Gross Sales of the Aira Fitness Business for the preceding calendar month in the manner we designate which may occur through required software programs. You will furnish to us at our request the following reports in the manner and the time we designate: monthly profit and loss statement and balance sheet; calendar year-end balance sheet and an annual profit and loss statement for the calendar year reflecting all year-end adjustments; all state and local sales tax returns and all federal, state and local income tax returns; reports on membership; and such other reports as we may require from time to time. You must verify and sign all reports submitted to us. If you fail to report your monthly Gross Sales on a timely basis, we may estimate your Gross Sales; we may then withdraw any unpaid Royalties, National Marketing fees or other amount due by use of our Approved Payment Processor. You authorize us to utilize the data supplied by you in such manner and for such purposes as we desire, including but not limited to, operations reports, advertising reports, other business reports and in any publication, disclosure statement, franchise disclosure document, or advertisement related to the sale of franchised businesses or related entities by us, anywhere, at any time, without specific compensation therefore. Such data will not include any records or information relating to your employees, as you exclusively control its employment matters and practices.
• C. Our Right to Audit. You will allow our representatives to enter, without prior notice, the Aira Fitness Business at any time to inspect and audit your business operations, records, and reports. For purposes of this inspection and audit, records and reports exclude your employment records for your employees. In the event any such inspection or audit shall disclose an understatement of the Gross Sales of the Aira Fitness Business for any period, you shall pay to us within ten (10) days after receipt of the inspection or the audit report, the Royalties, the National Marketing Fees, and other fees plus interest and late fees due on the amount of the understatement. Further, if the audit is made necessary by your failure to furnish reports, financial statements, tax returns or schedules as herein required, or if an understatement of Gross Sales for any period is determined by any such inspection or audit to be greater than two percent (2%), you shall reimburse usfor the cost of such inspection or audit including, without limitation, the charges of attorneys and independent accountants and the travel expenses, room and board, and compensation of our employees or agents, and we shall have the right to require you to furnish, at your sole cost and expense, financial statements prepared by an independent certified public accountant thereafter. In addition, you shall pay for all costs, as specified above, of the inspection and audit if your books and records are not produced at the time of the inspection and audit, provided that we notified you at least five (5) days prior to the scheduled inspection and audit date. We shall have the right to review the operation and administration of the Aira Fitness Business by quality control testing, periodic field reviews and such other tests, reviews and inspections and other reasonable actions deemed desirable by us.
• D.

Source: Item 23 — **RECEIPTS (FDD pages 59–254)