Under what condition must a Basecamp Fitness franchisee reimburse the franchisor for the cost of an audit?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
We will have the right to audit or cause to be audited any financial information you provide to us, and your books, records, and sales and income tax returns.
If any audit discloses an understatement of the Gross Revenues of your Basecamp Studio for any period or periods, you will, within five (5) days of receiving the audit report, pay to all Royalty Fees and General Advertising and Marketing Fund Contributions due on the previously unreported Gross Revenues, plus late payment charges.
In addition, if an understatement for any period equals two percent (2%) or more of the Gross Revenues of your Basecamp Studio for the period, you must reimburse us for the cost of the audit, including, without limitation, the charges of the person auditing your records, and their travel and living expenses.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Basecamp Fitness's 2025 Franchise Disclosure Document, a franchisee must reimburse Basecamp Fitness for the cost of an audit under specific circumstances related to the understatement of gross revenues. This reimbursement covers the expenses incurred by Basecamp Fitness for the audit, including the auditor's charges, travel, and living costs.
Specifically, if an audit reveals that a Basecamp Fitness studio has understated its gross revenues for any period, the franchisee is required to pay all royalty fees and general advertising and marketing fund contributions due on the previously unreported gross revenues, along with late payment charges, within five days of receiving the audit report.
In addition to paying the outstanding fees and charges, the franchisee must also reimburse Basecamp Fitness for the cost of the audit if the understatement equals two percent or more of the Basecamp Studio's gross revenues for the audited period. This provision incentivizes accurate financial reporting and ensures that Basecamp Fitness can recover audit expenses when significant underreporting occurs.