What interest rate will Angry Chickz charge on underpaid amounts discovered during an audit?
Angry_Chickz Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Audit | Cost of audit plus interest3 on the underpayment at the highest rate allowable by law (not to exceed 18%). | Upon demand | You must pay the cost of the audit if the audit shows an under- reporting or under-recording of 2% or more, three times within any 36- month period or 5% or more during any reporting period. |
(3) Interest begins from the date of the underpayment.
Source: Item 6 — OTHER FEES1 (FDD pages 11–15)
What This Means (2025 FDD)
According to Angry Chickz's 2025 Franchise Disclosure Document, if an audit reveals underpaid amounts, the franchisee will be charged interest on the underpayment. The interest rate is the highest rate allowable by law, but it will not exceed 18%. This interest begins accruing from the date of the underpayment.
This means that if Angry Chickz conducts an audit and finds that a franchisee has underreported their gross sales, leading to an underpayment of royalties, the franchisee will not only have to pay the underpaid royalties but also interest on that amount. The exact interest rate will depend on state and federal laws, but Angry Chickz caps it at 18%.
It's important for prospective Angry Chickz franchisees to maintain accurate records and report gross sales correctly to avoid potential audit costs and interest charges. The cost of the audit will be borne by the franchisee if the audit reveals an under-reporting or under-recording of 2% or more, three times within any 36-month period, or 5% or more during any reporting period. This policy incentivizes franchisees to be diligent in their financial reporting to avoid these additional expenses.