What is an Aplus franchisee required to do if an audit reveals payments to the franchisor have been underpaid?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
from time to time. 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 to permit Franchisor to verify Franchisee's compliance with its obligations under this Agreement.
12.6. Right to Inspect
- 12.6.1. Franchisor or its designee has the right, during normal business hours, to examine, copy and audit the books, financial data, business 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 plus interest from the date such amount was due until paid at the rate of the highest rate allowed by the law of the state where Franchisee is located. In the event Franchisee's books and records are missing or incomplete for Franchisor's review at the time of any scheduled audit, Franchisee shall be required to reimburse Franchisor for the costs of said audit.
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 underpayment to Aplus, the franchisee must immediately pay the underpaid amount. Additionally, the franchisee is required to pay interest on the underpaid amount from the date it was originally due until it is paid. The interest rate will be the highest rate allowed by law in the state where the franchisee's Aplus store is located.
Furthermore, if an audit reveals that the franchisee's books are missing or incomplete, or if there is an underpayment of any amount due to Aplus, the franchisee must immediately pay Aplus as invoiced. If the underreported results are less than 5% as determined by the audit, the franchisee will pay 6% of the underreported amount. However, if the underreported results are more than 5% as determined by the audit, the franchisee will pay 6% of the underreported amount and reimburse Aplus for all costs and expenses connected with the inspection. This includes travel expenses and reasonable accounting and attorneys' fees.
These remedies are in addition to any other remedies Aplus may have. This means that Aplus could pursue other legal or contractual options in addition to these payment requirements. This policy incentivizes franchisees to maintain accurate records and make timely payments to avoid these additional costs and potential legal issues.