What are the conditions under which Aw franchisees must pay audit/inspection costs?

According to Aw's 2025 Franchise Disclosure Document, franchisees are responsible for covering audit and inspection costs under specific circumstances. These costs encompass the expenses associated with the audit or inspection itself, including charges from professional advisors, travel expenses, room and board, and compensation or fees for Aw's employees or agents involved in the process.

The primary trigger for these audit/inspection costs is the franchisee's failure to submit required reports, supporting records, financial statements, or other necessary information in a timely manner. This implies that Aw expects franchisees to maintain accurate and up-to-date records and to provide them according to the franchisor's schedule. Failure to comply with these reporting requirements can lead to an audit at the franchisee's expense.

Additionally, Aw franchisees will be responsible for audit costs if an audit reveals an understatement of reported Gross Sales exceeding 2%. This condition highlights the importance of accurate sales reporting. Gross Sales are defined as all receipts from sales of food, beverages, merchandise, or services from the Papa Ray's Pizza Restaurant. Franchisees must submit weekly reports of Gross Sales to Aw. Underreporting sales by more than 2% can trigger an audit, with the franchisee bearing the associated costs. The audit/inspection costs are due upon billing from Aw.