What does Section 13, 'Inspection and Audits', of the Batteries Plus Bulbs Franchise Agreement cover?
Batteries_Plus_Bulbs Franchise · 2025 FDDAnswer from 2025 FDD Document
13. INSPECTION AND AUDITS
- A. Franchisor's Right To Inspect The Store. To determine whether Franchisee is complying with this Agreement, Franchisor may, at any time during business hours and without prior notice to Franchisee, inspect the Store. Franchisee will fully cooperate with Franchisor's representatives making any inspection and will permit Franchisor's representatives to take photographs or videotapes of the Store and to interview employees and customers of the Store.
- B. Franchisor's Right To Examine Books And Records. Franchisor may, at all reasonable times and without prior notice to Franchisee, examine, audit, or request copies of the Records, including the books, records and state and/or federal income tax records and returns of any Principal Owner. Franchisee must maintain all Records and supporting documents at all times at the Store premises. Franchisee will make financial and other information available at a location Franchisor reasonably requests and will allow Franchisor (and its agents) full and free access to any such information at the Store. Franchisee otherwise will fully cooperate with Franchisor's representative and independent accountants hired to conduct any examination or audit.
- C. Result of Audit; Unreported Net Revenues. If any examination or audit discloses an understatement of Net Revenues for any month, Franchisee will pay to Franchisor, within fifteen (15) days after receipt of the examination or audit report, the Royalty and Services Fees, any NMF Fees and any other fees due on the amount of the understatement, plus interest (at the rate provided in Section 9(D) above) from the date originally due until the date of payment. Franchisee must reimburse Franchisor for the cost of the audit or examination, including the charges of any independent accountants and the travel expenses, room and board and compensation of employees of Franchisor, if: (1) an examination or audit is necessary because Franchisee failed to timely provide required information; (2) any examination or audit results in a determination that Net Revenues for any month are understated by greater than two percent (2%); or (3) Franchisee fails to spend the minimum amount required for local store promotion under Section 11(B) above. The foregoing remedies are in addition to all other remedies and rights of Franchisor under applicable law.
Source: Item 22 — Contracts (FDD page 80)
What This Means (2025 FDD)
According to the 2025 Batteries Plus Bulbs Franchise Disclosure Document, Section 13 of the Franchise Agreement details the franchisor's rights to inspect the store and audit financial records. Batteries Plus Bulbs, without prior notice and during business hours, can inspect the store to ensure compliance with the agreement. The franchisee must cooperate fully, allowing representatives to take photos or videos and interview employees and customers.
Batteries Plus Bulbs also has the right to examine and audit the franchisee's records at reasonable times and without prior notice. This includes books, records, and state and federal income tax records of any Principal Owner. The franchisee must maintain all records at the store premises and provide financial information at a location Batteries Plus Bulbs requests. The franchisee must also allow full access to this information to Batteries Plus Bulbs and its agents.
If an audit reveals an understatement of Net Revenues for any month, the franchisee must pay the Royalty and Services Fees, any NMF Fees, and other fees due on the understated amount, plus interest from the original due date, within fifteen days of receiving the audit report. The franchisee will also reimburse Batteries Plus Bulbs for the cost of the audit if (1) the audit was necessary due to the franchisee's failure to provide timely information, (2) the audit reveals that Net Revenues were understated by more than two percent for any month, or (3) the franchisee failed to spend the minimum amount required for local store promotion. These remedies are in addition to any other rights Batteries Plus Bulbs has under applicable law.