Can Auntie Annes charge a fee to review a franchisee's systems for compliance?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
14.1 Inspections and Audits. We or any of our authorized agents may at any time during normal business hours (including pre-opening and post-closing) enter the Franchised Business or any other place where business related to the Franchised Business is conducted and: (i) conduct an operational audit to determine your material compliance, as we determine, with this Agreement; (ii) examine, analyze, and inspect the Franchised Business, the Proprietary Goods, the Approved Products, and any products produced and/or sold or distributed at, from, or through the Franchised Business (whether authorized or unauthorized); (iii) take reasonable samples of any the Proprietary Goods, the Approved Products, and any products produced and/or sold or distributed at, from, or through the Franchised Business (whether authorized or unauthorized), without charge or liability; (iv) videotape, photograph, or otherwise record the operation of the Franchised Business; (v) interview your employees, customers, landlords, and suppliers; and (vi) audit, review and examine by any means, including electronically through the use of telecommunications devices or otherwise, at our expense, your books, records, accounts, and tax returns related to the Franchised Business. We may require you to send us copies of your books, records, and files related to the Franchised Business, which you must provide to us or our representatives within a reasonable time (not to exceed 10 days) of our request. We also may require you to participate in customer satisfaction surveys or other audit programs, including electronically through the use of telecommunications devices or otherwise, to assess your compliance with our customer service standards. You will provide us with full cooperation in the course of any inspection or audit we conduct under this Section. Any inspections will be made at our expense, unless the inspection is necessitated by your repeated or continuing failure to comply with any provision of this Agreement, in which case we may charge you non-compliance
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Anne's 2024 Franchise Disclosure Document, Auntie Anne's has the right to conduct operational audits to determine a franchisee's compliance with the Franchise Agreement. These inspections and audits can occur at any time during normal business hours, including before opening and after closing. Auntie Anne's, or its authorized agents, can enter the franchised business or any other place where business related to the franchised business is conducted to perform these audits.
During these audits, Auntie Anne's can examine and inspect the franchised business, proprietary goods, and approved products. They can also take reasonable samples of these items without charge or liability, videotape or photograph the business's operation, interview employees, customers, landlords, and suppliers, and audit the franchisee's books, records, accounts, and tax returns. Franchisees are required to fully cooperate during these inspections and audits and may be required to participate in customer satisfaction surveys or other audit programs.
While Auntie Anne's will generally bear the expense of these inspections, the franchisee may be charged non-compliance fees and the costs incurred by Auntie Anne's if the inspection is due to the franchisee's repeated or continuing failure to comply with any provision of the Franchise Agreement. This means that if a franchisee consistently fails to meet the standards set by Auntie Anne's, they may be responsible for covering the costs of the inspections necessary to ensure compliance.