Besides the 6% of the underreported amount, what additional costs are Aplus franchisees responsible for if underreported results are more than 5%?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
(b) For underreported results more than five present (5%) as determined by the audit, then 6% of the underreported amount and reimbursement to 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 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, if an audit reveals underreported results exceeding 5%, the franchisee is responsible for covering additional costs beyond the 6% of the underreported amount. Specifically, the franchisee must reimburse Aplus for all expenses associated with the inspection. These costs encompass travel expenses, reasonable accounting fees, and attorney's fees. These remedies are in addition to any other legal options Aplus might pursue.
This means that Aplus franchisees need to maintain accurate and complete financial records to avoid potential underreporting. The financial repercussions of underreporting can be significant, extending beyond the underpaid amount to include audit-related expenses.
For a prospective Aplus franchisee, this highlights the importance of diligent bookkeeping and regular financial reviews. It would be prudent to establish robust accounting practices and potentially engage a professional accountant to ensure compliance and minimize the risk of underreporting. Furthermore, understanding the scope and potential costs associated with inspections and legal remedies is crucial for financial planning and risk management.