Is the estimated cost of the Baya Bar audit a fixed fee?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
--------------------------------| | Fees (1) | Amount | Due Date | Remarks | | Pre-Opening Training (For New or Replacement Employees) | Our then-current per session training fee, plus expenses Current per session training fee = $3,000 | Before Training | We will train up to three people at no additional charge. If you request that we provide our pre-opening training program to any additional employees, or to new or replacement employees during the term of your Franchise Agreement, you must pay our training fee as well as the trainees' expenses, including travel, lodging, meals and wages. | | Additional Onsite Training/Remedial Training | Our then-current per diem rate per trainer, plus expenses Current per diem rate = $600 | When billed | If you request that we provide additional training or support at your Shop, or if as the result of an inspection or quality assurance audit we believe that remedial training is necessary, you must pay our daily fee for each trainer we send to your Shop, and you must reimburse each trainer's expenses, including travel, lodging and meals. | | Interest | 18% per annum or the highest interest rate allowed by applicable law, whichever is less | On demand | Interest may be charged on all overdue amounts. Interest accrues from the original due date until payment is received in full.
Source: Item 6 — OTHER FEES (FDD pages 11–16)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, the audit fee is not a fixed amount. Instead, it is based on the cost of the audit, with an estimated range between $1,000 and $5,000. This fee is only payable if an audit reveals that the franchisee has understated gross sales by 2% or more, or has understated any amount owed to Baya Bar.
In addition to covering the cost of the audit itself, the franchisee is also responsible for paying the understated amount plus interest. This means that the total financial impact of an audit could be significantly higher than the initial $1,000 to $5,000 estimate, depending on the extent of the underreporting and the applicable interest rate.
This policy incentivizes franchisees to maintain accurate financial records and report sales and other financial obligations transparently. Franchisees should ensure they have robust accounting practices in place to avoid triggering an audit and incurring these additional costs. It is also important to note that the FDD specifies that interest may be charged on all overdue amounts at a rate of 18% per annum, or the highest interest rate allowed by applicable law, whichever is less.