Under what financial condition is the audit fee payable to Beem Light Sauna?

According to Beem Light Sauna's 2025 Franchise Disclosure Document, an audit fee is payable if an audit or review reveals an understatement of Gross Sales for the audited or reviewed period of 2% or more. The fee can be up to 120% of Beem Light Sauna's and its affiliates' costs and expenses. This includes charges from any independent accountant, related attorneys' fees, and the cost of travel, living expenses, and wages for the accountant, Beem Light Sauna's employees, and other agents. The audit fee is due within 10 days of demand.

This means that if Beem Light Sauna suspects that a franchisee is underreporting their sales by at least 2%, they can conduct an audit. If the audit confirms the understatement, the franchisee is responsible for covering the costs associated with the audit, potentially up to 120% of the expenses incurred by Beem Light Sauna and its affiliates.

For a prospective Beem Light Sauna franchisee, this highlights the importance of maintaining accurate and transparent financial records. Underreporting sales, even unintentionally, can lead to a costly audit. Franchisees should ensure they have robust accounting practices in place to accurately track and report Gross Sales to avoid triggering an audit and the associated fees. This is a fairly standard practice in franchising, as franchisors rely on accurate sales reporting to calculate royalties and maintain the integrity of the franchise system.