What is the Baya Bar franchisee's responsibility regarding the understated amount discovered during an audit?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
| (1) | (2) | (3) | (4) |
|---|---|---|---|
| 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. * See below |
| Audit Fee | Cost of audit (estimated to be between $1,000 and $5,000) | When billed | Payable only if we find, after an audit, that you have understated Gross Sales by 2% or more or you have understated any amount you owe to us. You must also pay the understated amount plus interest. |
| (1) | (2) | (3) | (4)
Source: Item 6 — OTHER FEES (FDD pages 11–16)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, if an audit reveals that a franchisee has understated their Gross Sales by 2% or more, or has understated any amount owed to Baya Bar, the franchisee is responsible for specific financial obligations. In addition to covering the cost of the audit itself, which is estimated to range from $1,000 to $5,000, the franchisee must also pay the understated amount.
Furthermore, Baya Bar charges interest on the understated amount. This interest accrues from the original due date of the payment until the full amount is received. The interest rate is set at 18% per annum or the highest interest rate allowed by applicable law, whichever is less.
This policy ensures that Baya Bar is compensated for any discrepancies in reported sales or payments, while also incentivizing franchisees to maintain accurate financial records. Franchisees should be aware of these potential costs and ensure they have systems in place to accurately track and report their Gross Sales to avoid triggering an audit and incurring these additional expenses.