What specific records of an Aw franchisee are subject to inspection and audit by Aw?

According to Aw's 2025 Franchise Disclosure Document, Aw has the right to inspect and audit a franchisee's business records, bookkeeping and accounting records, sales and income tax records and returns, and other records of the Papa Ray's Pizza Restaurant. This extends to the books and records of any entity that is the franchisee. However, Aw's right to audit does not extend to a franchisee's employee employment records.

This broad audit clause allows Aw to scrutinize virtually all financial and operational aspects of the franchise. Aw can perform these audits at any time during business hours and without advance notice. Franchisees must cooperate fully with Aw's representatives and independent accountants during any inspection or audit.

Franchisees are also required to furnish Aw with various reports, including weekly gross sales reports, monthly and year-to-date profit and loss statements, balance sheets, copies of sales tax returns, and relevant portions of state and federal income tax returns. Aw also reserves the right to require franchisees to have their financial statements prepared annually by an independent certified public accountant. Failing to provide these reports or other requested information can trigger an audit, the cost of which the franchisee may have to bear.

The ability to conduct unannounced audits is a standard practice in franchising, allowing franchisors to ensure compliance with system standards and accurate reporting of financial data. Franchisees should maintain meticulous records and be prepared for potential audits to avoid penalties or disputes.