What is the condition for a Beehive Homes franchisee to reimburse the franchisor for the costs of an audit?

According to Beehive Homes' 2025 Franchise Disclosure Document, a franchisee may be required to reimburse Beehive Homes for the costs of an audit under specific circumstances. Beehive Homes retains the right to audit a franchisee's financial reports and information at its own expense. However, if such an audit reveals that the franchisee has understated their Gross Revenues by 2% or more for any period, the franchisee is then responsible for reimbursing Beehive Homes for the full costs of the audit.

This provision serves as a financial safeguard for Beehive Homes, ensuring the accuracy of reported revenues, which directly impact royalty payments. It also incentivizes franchisees to maintain accurate financial records and report their gross revenues honestly. The 2% threshold provides a reasonable margin of error, preventing franchisees from being penalized for minor discrepancies.

For a prospective Beehive Homes franchisee, this means maintaining meticulous and transparent financial records is crucial. Underreporting revenues, even unintentionally, could lead to a costly audit and subsequent reimbursement obligation. Franchisees should implement robust accounting practices and regularly review their financial data to ensure accuracy and compliance with the reporting requirements outlined in the Franchise Agreement.

Furthermore, the table in Item 6 of the FDD indicates that the audit fees are equivalent to the actual cost incurred and are paid to third parties. This suggests that Beehive Homes uses independent auditors, adding another layer of impartiality to the process. Franchisees should clarify with Beehive Homes the process and criteria used for selecting auditors to ensure transparency and fairness.