If an All County audit discloses an understatement of 2% or more, what costs must the franchisee reimburse?
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 a franchisee has understated payments by 2% or more, the franchisee must cover several costs. Specifically, the franchisee is responsible for repaying the understated amount, along with interest calculated from the original due date at the highest contract rate permitted by law.
In addition to repaying the understated amount and interest, the franchisee must also reimburse All County for all expenses associated with the inspection or audit. These expenses include, but are not limited to, charges from attorneys and independent accountants involved in the audit. Furthermore, the franchisee is responsible for covering the travel expenses, room and board, and compensation for All County's employees who participated in the audit.
This policy ensures that All County franchisees accurately report their financial information. The financial burden placed on franchisees who underreport by 2% or more is substantial, as it includes not only the repayment of the understated amount with interest but also all costs associated with the audit itself. This provision serves as a deterrent against underreporting and encourages franchisees to maintain accurate and transparent financial records.