How can All States M.E.D. review a franchisee's business operations?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
0 days after the end of each calendar year, an income statement for the calendar year just ended and a balance sheet as of the last day of the calendar year. Franchisee shall submit to Franchisor such other periodic reports in the manner and at the time specified in the Operations Manual or otherwise in writing.
12.4 Other Reports
Franchisee shall submit to Franchisor copies of all state sales tax returns that are required to be filed with the appropriate governmental agency and such other records as Franchisor may reasonably
request from time to time or as specified in the Operations Manual. Franchisor shall have the right to release financial and operational information relating to the Franchised Business to Franchisor's lenders or prospective lenders. Franchisee shall certify as true and correct all reports to be submitted according to this Agreement.
12.5 Computer and Surveillance Equipment
Franchisee shall purchase, install and use computer equipment consisting of hardware and software in accordance with Franchisor's specifications. Franchisor shall have full access to all of Franchisee's computer, data and systems and all related information by means of direct access, either in person or by telephone, modem or Internet. Franchisor shall have full access to any video or surveillance stream.
12.6 Right to Inspect
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.
Independent Access to Information. We have, and you are required to, provide independent access to the information that will be generated or stored in your computer systems, which includes, but not limited to, customer, transaction, and operational information. We have the right to review your business operations, in person, by mail, or electronically, and to inspect your operations and obtain your paper and electronic business records related to the Franchised Business and any other operations taking place through your Franchised Business.
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to the 2024 All States M.E.D. Franchise Disclosure Document, All States M.E.D. has several methods to review a franchisee's business operations. All States M.E.D. can request copies of state sales tax returns and other records from the franchisee. They also have the right to release financial and operational information about the franchised business to their lenders or prospective lenders. Franchisees must certify that all submitted reports are true and correct.
All States M.E.D. can also access the franchisee's computer systems, data, and related information, including video or surveillance streams, either in person or remotely via telephone, modem, or the Internet. Additionally, All States M.E.D. or its designee can inspect, copy, and audit the franchisee's books, records, and tax returns during normal business hours without prior notice.
If an audit 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 be required to pay interest at a rate of 1.5% per month (or the legally allowed rate in the franchisee's state, if lower) from the date the amount was due until it is paid. The franchisee will also reimburse All States M.E.D. for all costs and expenses associated with the inspection, including travel expenses, accounting fees, and attorney's fees. These remedies are in addition to any other remedies All States M.E.D. may have.
All States M.E.D. or its representatives may also make periodic visits to the franchised business, which can be announced or unannounced, to provide consultation, assistance, and guidance on various aspects of the business's operation and management. All States M.E.D. may also accompany the franchisee and their employees on job site visits to monitor business practices and offer advice. Following these visits, All States M.E.D. may prepare written reports detailing any problems or concerns and outlining required or suggested changes or improvements, a copy of which may be provided to the franchisee, who is then expected to implement any required changes.