Does Aw need to provide advance notice before auditing an Aw franchisee?

According to Aw's 2025 Franchise Disclosure Document, Aw has the right to audit a franchisee's business records without providing any advance notice. Specifically, Aw can inspect and audit the business records, bookkeeping and accounting records, sales and income tax records, and other records of the Papa Ray's Pizza Restaurant at any time during business hours. This also extends to the books and records of any entity that is the franchisee. However, employment records for employees are excluded from these inspections and audits.

This lack of advance notice provides Aw with significant oversight capabilities, allowing them to verify compliance with the franchise agreement and identify any potential discrepancies in reported gross revenue. Franchisees must maintain accurate and complete records for a minimum of five years to facilitate these audits.

If an audit reveals an understatement of gross revenue, the franchisee is responsible for paying the due marketing contributions, along with interest on the understated amount from the original due date. Furthermore, if the audit was necessitated by the franchisee's failure to provide required reports or if the understatement of gross revenue exceeds two percent for any period, the franchisee must reimburse Aw for the cost of the audit. This includes charges for attorneys, independent accountants, and travel expenses incurred by Aw's employees.

While the FDD specifies that audits can occur without advance notice, franchisees should maintain organized and accurate records to ensure compliance and avoid potential penalties or disputes. Franchisees should also be aware of the conditions under which they may be responsible for covering the costs of an audit, which can include instances of non-compliance or significant revenue underreporting.