Under what conditions will a Beehive Homes franchisee be responsible for the cost of an inspection or audit?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
6.5. Covenants.
(a) Franchisee agrees, as a direct covenant with Franchisor and its Affiliates, that it will comply with all of the provisions of this Agreement related to the manner, terms and conditions of the use of the Names and Marks and the termination of any right on Franchisee's part to use any of the Names and Marks. Any non-compliance by Franchisee with this covenant or the terms of this Agreement related to the Names and Marks, or any unauthorized or improper use of the System or the Names and Marks, will cause irreparable damage to Franchisor and/or its Affiliates and is a material breach of this Agreement.
(b) If Franchisee engages in such non-compliance or unauthorized and/or improper use of the System or the Names and Marks during or after the Term, Franchisor or any of its Affiliates, together with the successors and assigns of each, will be entitled to both temporary and permanent injunctive relief against Franchisee from any court of competent jurisdiction, in addition to all other remedies Franchisor or its Affiliates may have at law. Franchisee consents to the entry of such temporary and permanent injunctions. Franchisee must payall costs and expenses, including reasonable attorneys' fees, expert fees, costs and other expenses of litigation that Franchisor and/or its Affiliates may incur in connection with Franchisee's non-compliance with this covenant.
8.8. Inspections. Franchisee hereby consents to reasonable inspections during normal business hours of Franchisee's Home and business premises at reasonable intervals by Franchisor and/or its Affiliates and their agents.
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- At anytime during normal business hours, Bee Hive Homes may examine and copy any of Assignor's, Assignee's, or any [Shareholder's/Partner's/Member's] records, books, financial records, tax returns, or other documents for the purpose of insuring compliance with the Franchise Agreement and this Assignment.
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to the 2025 Beehive Homes Franchise Disclosure Document, a franchisee consents to reasonable inspections of their home and business premises during normal business hours at reasonable intervals by Beehive Homes and/or its affiliates and their agents. However, the document does not explicitly state that the franchisee will bear the cost of these inspections.
Paragraph 6.5(b) of the franchise agreement states that if a Beehive Homes franchisee engages in non-compliance or unauthorized use of the system or the Names and Marks, the franchisee must pay all costs and expenses, including reasonable attorneys' fees, expert fees, costs, and other expenses of litigation that Beehive Homes and/or its affiliates may incur in connection with the franchisee's non-compliance with this covenant. This implies that if an inspection or audit is required due to the franchisee's non-compliance, the franchisee would be responsible for the associated costs.
Additionally, paragraph 14 states that Beehive Homes may examine and copy any of the Assignor's, Assignee's, or any [Shareholder's/Partner's/Member's] records, books, financial records, tax returns, or other documents for the purpose of insuring compliance with the Franchise Agreement and this Assignment. The FDD does not specify who bears the cost of this examination and copying of documents.
Prospective Beehive Homes franchisees should seek clarification from the franchisor regarding the specific circumstances under which they would be responsible for the costs of inspections or audits, particularly those related to compliance issues or the examination of financial records.