If a B Bops franchisee underpays royalties, what else besides the deficiency must they pay?

According to B Bops's 2025 Franchise Disclosure Document, if a franchisee underpays royalties or fees, they are responsible for covering the deficiency in addition to other charges. Specifically, B Bops has the right to audit a franchisee's books within five years of any financial report submitted. If an audit reveals a deficiency in royalties or fees, the franchisee must pay the amount owed.

In addition to covering the underpaid amount, the franchisee will also have to pay interest on the deficiency. The interest rate is set at one and one-half percent (1-1/2%) per month, or the maximum rate allowed by the law of the state in which the B Bops franchise is located, whichever is less. This interest accrues from the original due date until B Bops receives full payment.

This policy encourages franchisees to maintain accurate records and make timely payments. The interest charge serves as a penalty for underpayment and compensates B Bops for the time value of money and the administrative costs associated with identifying and collecting the deficiency. A prospective B Bops franchisee should be aware of these financial implications and ensure they have systems in place to accurately track and report gross sales to avoid underpayment of royalties and fees.