Under what conditions does a B Bops franchisee have to pay for the cost of an examination or audit?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition, if the amount of gross sales for such period, as determined by such examination or audit, is greater by three percent (3%) or more than the amount shown by Franchisee's reports, Franchisee shall pay the cost of the examination or audit (including, but not limited to, wages and accounting, travel and lodging expenses); otherwise, the cost thereof shall be paid by Company.
Any amounts owing to Company under this Section 9(F) shall be paid upon demand by Company.
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, a franchisee may be responsible for covering the costs of an examination or audit under specific circumstances. If an examination or audit reveals that the franchisee's reported gross sales for a given period are understated by three percent (3%) or more, the franchisee is obligated to pay for the expenses associated with the examination or audit. These expenses include wages, accounting fees, travel costs, and lodging expenses.
Conversely, if the audit does not reveal an underreporting of gross sales by three percent (3%) or more, B Bops will bear the cost of the examination or audit. Any amounts owed by the franchisee under this provision are due upon demand from B Bops.
This policy incentivizes accurate reporting of gross sales by B Bops franchisees. Franchisees should maintain meticulous records and ensure accurate reporting to avoid potentially incurring the costs of an audit. This also means that B Bops has a mechanism to ensure accurate royalty payments, as these are based on a percentage of gross sales.