Under what conditions is a Benjamin Franklin Plumbing franchisee required to pay for an examination or audit?
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, a franchisee may be required to cover the costs of an examination or audit under specific circumstances. These circumstances arise when the franchisee fails to meet certain reporting and record-keeping obligations, or if there are significant discrepancies in reported revenue.
Specifically, Benjamin Franklin Plumbing will require the franchisee to pay for the examination or audit if the franchisee fails to submit reports of Gross Revenue or required financial statements. Similarly, failure to maintain books and records as required by Benjamin Franklin Plumbing will trigger this requirement. Furthermore, if an audit reveals that the cumulative Gross Revenue reported by the franchisee for any three consecutive month period is more than 2% below the actual Gross Revenue for that period, the franchisee will be responsible for covering the costs of the audit.
The costs that the franchisee would be responsible for include not only the direct costs of the examination or audit but also any travel and lodging expenses incurred by the examiners or auditors. To calculate these costs, Benjamin Franklin Plumbing will use hourly rates for their personnel that are consistent with the rates charged by mid-level professionals from independent accounting firms. This policy ensures that franchisees bear the financial burden of audits when non-compliance or significant discrepancies in reporting necessitate such examinations.