Under what conditions must an Aw franchisee reimburse Aw for the cost of an audit?

According to Aw's 2025 Franchise Disclosure Document, a franchisee may have to reimburse Aw for the cost of an inspection or audit under specific circumstances. These circumstances arise if the franchisee fails to provide required reports, supporting records, information, or financial statements in a timely manner, thus necessitating the audit.

Additionally, Aw will require reimbursement if the audit reveals an understatement of the Papa Ray's Pizza Restaurant's Gross Revenue exceeding two percent (2%) for any period. If either of these conditions is met, the franchisee is responsible for covering the expenses associated with the inspection or audit. These expenses include charges from attorneys and independent accountants, as well as travel, room and board, and per diem charges for Aw's employees.

This policy incentivizes Aw franchisees to maintain accurate financial reporting and comply with reporting deadlines. Failure to do so can result in unexpected costs for the franchisee. The two percent threshold provides some leeway for minor discrepancies, but significant underreporting triggers the reimbursement obligation. This is a fairly standard practice in franchising, as franchisors need to ensure accurate royalty payments and maintain brand integrity through compliance with reporting requirements.