What is the condition for Beehive Homes to audit a franchisee's financial reports at the franchisee's expense?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
YOU are required by the Franchise Agreement to submit to US certain financial reports and information. WE have the right to audit or cause to be audited these financial reports and information at OUR expense. However, if the audit discloses an understatement of 2% or more of the Gross Revenues of the franchise for any period, YOU are required to reimburse US for the costs of the audit.
Source: Item 6 — OTHER FEES (FDD pages 11–13)
What This Means (2025 FDD)
According to Beehive Homes's 2025 Franchise Disclosure Document, franchisees are typically responsible for covering the costs of an audit conducted by Beehive Homes if the audit reveals an understatement of 2% or more in the franchise's gross revenues for any given period.
This means that while Beehive Homes initially bears the expense of auditing a franchisee's financial records, this cost can be shifted to the franchisee if discrepancies exceeding the 2% threshold are discovered. This provision encourages franchisees to maintain accurate and transparent financial reporting.
The specific amount the franchisee would have to pay would be the actual cost incurred by Beehive Homes for conducting the audit. This policy is designed to ensure the accuracy of reported revenues and to deter underreporting, which directly impacts the royalty fees paid to Beehive Homes. Franchisees should maintain meticulous records to avoid potential audit-related expenses.