What is the financial threshold that triggers audit/inspection costs for Aw franchisees?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE1,3 | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| Audit/Inspection Costs | Cost of audit or inspection, including charges of professional advisors, and travel expenses, room and board and compensation or fees of our employees or agents | Upon billing | Payable if audit necessary because of your failure to file reports, supporting records, financial statements, or other required information in a timely fashion or if any audit reveals an understatement of the reported Gross Sales of greater than 2%. |
Source: Item 6 — OTHER FEES (FDD pages 13–16)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, franchisees may incur audit or inspection costs under specific circumstances. These costs, which include charges from professional advisors, travel expenses, room and board, and compensation for Aw's employees or agents, become payable upon billing.
An audit or inspection is triggered if a franchisee fails to submit required reports, supporting records, financial statements, or other necessary information in a timely manner. Additionally, Aw will conduct an audit if there is an understatement of reported Gross Sales exceeding 2%.
This policy is fairly standard in franchising, as franchisors need to ensure accurate reporting for royalty calculations and brand consistency. Franchisees should ensure they maintain meticulous records and adhere to all reporting deadlines to avoid these potentially significant audit costs. Underreporting sales is a serious issue that can lead to further penalties or even termination of the franchise agreement.