Under what circumstances can Beggars Pizza have an independent audit made of a franchisee's books?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
- 11.5 Inspection and Audit.
Franchisor and its designated agents examine and copy at all reasonable times the books, records, accounts, and tax returns of Franchisee at Franchisor's expense.
Franchisor may have an independent audit made of the books of Franchisee at any time.
If an inspection reveals that any payments have been understated in any report to Franchisor, then
Franchisee must immediately pay to Franchisor the amount understated upon demand with interest from the date such amount was due until paid at the rate of eighteen percent (18%) per annum or the maximum rate permitted by law (whichever is less) plus all of Franchisor's costs and expenses in connection with the inspection including, without limitation, travel costs, lodging and wages expenses, and reasonable accounting and legal costs. The foregoing remedies will be in
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, Beggars Pizza has the right to conduct an independent audit of a franchisee's financial records at any time. This provision allows Beggars Pizza to verify the accuracy of reported financial information and ensure compliance with the franchise agreement.
For a prospective franchisee, this means that Beggars Pizza can, at its discretion, hire an independent auditor to review the franchisee's books. If the audit reveals that the franchisee has understated any payments due to Beggars Pizza, the franchisee is responsible for paying the understated amount immediately upon demand.
In addition to the understated amount, the franchisee must also pay interest on the amount from the date it was originally due, calculated at a rate of 18% per annum or the maximum rate permitted by law, whichever is less. The franchisee is also responsible for covering all of Beggars Pizza's costs and expenses associated with the inspection, including travel, lodging, wages, accounting, and legal fees. These measures ensure that Beggars Pizza can enforce accurate financial reporting and recoup any losses resulting from underreported payments.