When is the audit fee due to Alloy?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
penses to be paid include your attendees' |
| Name of Fee (1) | Amount | Date Due | Remarks |
|---|---|---|---|
| travel, lodging, meals, and wages | |||
| Insufficient Funds/Late Report Fee | $100 fee for late report/late payment, with fee increasing by $50 for each subsequent late report/late payment (up to a maximum of $250 for the fourth and any subsequent late report/late payment | On demand, if incurred | You must pay us this fee if there are not sufficient funds in your bank account to process payments owed to us and/or our affiliates or you are late in submitting reports. If you incur this fee three times in any 12 month period, we may terminate your Franchise Agreement without giving you the right to cure the default |
| Interest on Overdue Amounts | 12% per annum or the highest legal contract rate, whichever is less | Upon billing | Payable on all overdue amounts. Interest accrues from the original due date until payment is received in full |
| Audit | Cost of the audit (estimated to be between $1,000 and $5,000) | On demand | Payable only if the audit is conducted due to your failure to provide reports when required or if the audit shows you have understated any amount due to us (or Gross Sales) by 3% or more. You must als |
Source: Item 6 — OTHER FEES (FDD pages 15–20)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the audit fee is due 'on demand.' The cost of the audit is estimated to be between $1,000 and $5,000.
This fee is only payable if Alloy conducts an audit because the franchisee failed to provide required reports or if the audit reveals that the franchisee understated any amount due to Alloy (or Gross Sales) by 3% or more. In addition to the cost of the audit, the franchisee is also responsible for paying any understated amount plus interest.
In the franchise industry, audit fees are not uncommon. Franchisors typically reserve the right to audit a franchisee's books to ensure compliance with reporting requirements and to verify the accuracy of royalty payments. The conditions under which the audit fee is charged by Alloy are also typical, as they are generally triggered by a franchisee's non-compliance or underreporting of sales.