Is the All States M.E.D. franchisee entitled to receive a copy of the written report prepared after a visit by the franchisor?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor or its designee has the right, during normal business hours without notice, to examine, copy, and audit the books, records and tax returns of Franchisee. If the audit or any other inspection should reveal that any payments to Franchisor have been underpaid, then Franchisee shall immediately pay to Franchisor the amount of the underpayment. If the audit reveals an underpayment of 2% or more during the review period, Franchisee shall also pay interest from the date such amount was due until paid at the rate of one and one-half percent (1.5%) per month (or the rate legally allowed by the law of the state where Franchisee is located, whichever is lower) and Franchisee shall, in addition, reimburse Franchisor for any and all costs and expenses connected with the inspection (including, without limitation, travel expenses and reasonable accounting and attorneys' fees). The foregoing remedies shall be in addition to any other remedies Franchisor may have.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
The 2024 Franchise Disclosure Document for All States M.E.D. addresses the franchisor's right to inspect the franchisee's business records. Specifically, All States M.E.D. or its designee has the right to examine, copy, and audit the books, records, and tax returns of the franchisee during normal business hours without notice.
If an audit or inspection reveals that payments to All States M.E.D. have been underpaid, the franchisee must immediately pay the underpayment. Furthermore, if the underpayment is 2% or more during the review period, the franchisee will also pay interest on the underpaid amount and reimburse All States M.E.D. for all costs and expenses connected with the inspection, including travel and accounting/attorney fees.
However, the FDD does not explicitly state that the franchisee is entitled to receive a copy of a written report prepared after a visit or audit by All States M.E.D.. While the franchisor has broad access and audit rights, the document remains silent on whether a formal report is provided to the franchisee following such an inspection. A prospective franchisee should seek clarification from All States M.E.D. regarding their policy on providing franchisees with copies of inspection or audit reports.