Under what conditions must an Angry Chickz franchisee pay for 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. |
Source: Item 6 — OTHER FEES1 (FDD pages 11–15)
What This Means (2025 FDD)
According to the 2025 Angry Chickz Franchise Disclosure Document, franchisees are responsible for covering the costs of an audit, along with interest on any underpayment, if certain discrepancies are discovered. The interest rate applied to the underpayment will be the highest rate legally permissible, but it will not exceed 18%.
Specifically, Angry Chickz requires the franchisee to pay for the audit if it reveals an under-reporting or under-recording of gross sales. This obligation arises if the under-reporting is 2% or more, and this occurs three times within any 36-month period. Alternatively, the franchisee is also responsible for audit costs if the under-reporting is 5% or more during any single reporting period.
This policy incentivizes accurate financial reporting by Angry Chickz franchisees. Franchisees should maintain meticulous records and diligently report all gross sales to avoid triggering an audit and incurring these additional expenses. The potential for an audit, and the associated costs, serve as a deterrent against inaccurate reporting, which protects the integrity of the royalty payments to Angry Chickz.