What are all the fees a Batteries Plus Bulbs franchisee might have to pay if they understate their Net Revenues, considering both the Initial Fees in Item 5 and the Audit fees in Item 6?

According to the 2025 Batteries Plus Bulbs FDD, if a franchisee understates their net revenues, they may be subject to certain fees. Item 6 specifies that if an audit reveals an understatement of at least 2% of net revenues for any month, the franchisee is responsible for the cost of the audit. Additionally, they will incur an interest charge of 1½% per month from the billing due date until the audit fees are paid. These audit-related fees are separate from the initial fees outlined in Item 5, which include the initial franchise fee, retail management system access and development fee ($38,968), and the Omni-Channel Program fee ($10,000).

It's important to note that the audit fee is only triggered if the understatement of net revenues meets or exceeds the 2% threshold. The interest is calculated monthly, so the longer the audit fees remain unpaid, the higher the total interest charges will be. The initial fees, such as the Retail Management System fee and Omni-Channel Program fee, are one-time costs paid at the start of the franchise agreement and are not directly related to the understatement of net revenues.

Prospective franchisees should understand the importance of accurate financial reporting to avoid potential audit fees and interest charges. Maintaining accurate records and adhering to the franchisor's reporting guidelines is crucial. The audit fee serves as a deterrent against underreporting revenues, ensuring that Batteries Plus Bulbs receives the correct royalty payments and maintains the integrity of its financial system across all franchise locations.