What interest rate applies to understated payments discovered during an All County audit?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
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 any payments, the franchisee must immediately pay the understated amount upon demand. In addition to the understated amount, All County will also charge interest from the date the amount was originally due until it is paid. The interest rate applied will be the highest contract rate of interest permitted by law.
This means that if All County discovers during an audit that a franchisee has underreported revenue or other amounts owed to All County, the franchisee will not only have to pay the difference but will also be subject to a potentially high interest rate on the unpaid balance. The specific interest rate will depend on the applicable state and federal laws, but it could be a significant penalty for underreporting.
Furthermore, if the understatement in any report is two percent or more, the franchisee is responsible for reimbursing All County for all costs and expenses connected with the inspection or audit. This includes charges for attorneys and independent accountants, as well as travel expenses, room and board, and compensation for All County employees involved in the audit. These remedies are in addition to All County's other rights and remedies under the agreement and applicable law.