How does Benjamin Franklin Plumbing calculate the cost of an examination or audit that the franchisee must pay?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
If we perform an examination or audit due to: (i) your failure to submit reports of Gross Revenue or required financial statements, or (ii) your failure to maintain books and records as required, or if (iii) the cumulative Gross Revenue you report for any period of three consecutive months is more than 2% below the actual Gross Revenue for the period as determined by the examination or audit, then you are required to pay us the cost of the examination or audit, including travel and lodging expenses for the examiners or auditors.
For purposes of calculating the cost, we will use hourly rates for our own personnel that are consistent with the rates of mid-level professionals of independent accounting firms.
Source: Item 23 — RECEIPTS (FDD pages 88–312)
What This Means (2025 FDD)
According to Benjamin Franklin Plumbing's 2025 Franchise Disclosure Document, franchisees may be required to cover the cost of an examination or audit under specific circumstances. These circumstances include failing to submit reports of Gross Revenue or required financial statements, failing to maintain books and records as required, or if the cumulative Gross Revenue reported for any three consecutive months is more than 2% below the actual Gross Revenue for that period, as determined by the audit.
The cost that the Benjamin Franklin Plumbing franchisee is responsible for includes the expenses for travel and lodging incurred by the examiners or auditors. To calculate the cost of the examination or audit, Benjamin Franklin Plumbing will use hourly rates for their own personnel that are consistent with the rates of mid-level professionals of independent accounting firms.
This means that if a Benjamin Franklin Plumbing franchisee fails to meet certain reporting or record-keeping obligations, or if there are significant discrepancies in reported revenue, they could face additional expenses for audits. The use of hourly rates comparable to those of independent accounting firms suggests that these costs could be substantial, depending on the scope and duration of the audit. Franchisees should ensure they maintain accurate records and comply with reporting requirements to avoid triggering an audit and incurring these costs.