What happens if an All County audit discloses an understatement of 2% or more?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
- 19.3. Cure. In the event an inspection or audit reveals that any payments have been understated in any report to us, then you must immediately pay to us the amount understated upon demand, in addition to interest from the date such amount was due until paid, at the highest contract rate of interest permitted by law. If an inspection or audit discloses an understatement in any report of two percent (2%) or more, you shall, in addition to repayment of monies owed with interest, reimburse us for any and all costs and expenses connected with the 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. The foregoing remedies are in addition to our other remedies and rights under this Agreement and applicable law.
Source: Item 23 — Receipts (FDD pages 43–157)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, if an audit reveals that payments have been understated by 2% or more in any report, the franchisee must take specific actions. In addition to immediately paying the understated amount plus interest from the original due date at the highest contract rate permitted by law, the franchisee is also responsible for reimbursing All County for all costs and expenses associated with the inspection or audit. These costs can include charges from attorneys and independent accountants, as well as travel expenses, room and board, and compensation for All County's employees.
This provision means that franchisees must maintain accurate and transparent financial reporting. Underreporting, even if unintentional, can lead to significant financial penalties beyond just the repayment of the understated amount. The interest charged and the reimbursement of audit-related expenses can substantially increase the financial burden on the franchisee.
All County retains broad rights to inspect and audit franchise operations to ensure compliance with the franchise agreement. These audits can occur at any time during regular business hours without prior notice, allowing All County to verify adherence to the agreement, operational methods, and service quality. Franchisees are expected to cooperate fully with these inspections, including providing access to records, personnel, and customers. The financial consequences of an audit revealing a significant understatement underscore the importance of accurate financial record-keeping and reporting for All County franchisees.