How much prior notice will Beauty Bungalows give before auditing a franchisee's business?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.03 Audits. Franchisee must provide Franchisor or its agent's access to Franchisee's Business and computer systems to examine or audit Franchisee's Business, at any reasonable time on at least ten (10) days prior notice to Franchisee. Franchisor will bear the cost of the audit, unless Franchisee fails to report as required or understates Gross Revenue by two percent (2%) or more for any reported time period, in which case Franchisee will pay the audit cost plus interest on understated costs of one percent (1%) per month. Franchisee must immediately pay to Franchisor all sums owed in addition to any other remedies provided in this Agreement or by law.
Source: Item 22 — CONTRACTS (FDD pages 47–48)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, Beauty Bungalows will provide at least ten days prior notice before auditing a franchisee's business. Specifically, Beauty Bungalows or its agents need to provide the franchisee with access to the business and computer systems to conduct examinations or audits. This access will be granted at any reasonable time, provided that the franchisee receives at least ten days' notice beforehand.
This means that a Beauty Bungalows franchisee should maintain organized and accurate business records, as they could be subject to an audit with just over a week's notice. Franchisees should ensure their computer systems and physical business locations are accessible for inspection.
It's important to note that while Beauty Bungalows bears the cost of the audit, this shifts to the franchisee if there are reporting failures or if gross revenues are understated by 2% or more for any reported period. In such cases, the franchisee is responsible for covering the audit costs and paying interest at a rate of 1% per month on the understated amounts. This creates a financial incentive for franchisees to maintain accurate and transparent financial reporting.