Under what two conditions is a Better Blend franchisee required to pay for an audit?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Our expenses | We may take any action we deem | ||
| appropriate to resolve a customer | |||
| complaint about your business. If we | |||
| respond to a customer complaint, we may | |||
| require you to reimburse us for our | |||
| expenses. | |||
| Payable only if (1) we audit you because | |||
| you have failed to submit required reports | |||
| or other non-compliance, or (2) the audit | |||
| concludes that you under-reported | |||
| adjusted gross sales b | |||
| any 4-week period. |
Source: Item 6 — OTHER FEES (FDD pages 11–15)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, a franchisee may be required to reimburse Better Blend for audit expenses under specific circumstances. These circumstances are triggered by the franchisee's actions or inactions related to reporting and compliance.
Specifically, Better Blend will require a franchisee to cover the expenses of an audit if the franchisee fails to submit required reports or is otherwise non-compliant with the franchise agreement. The second condition that triggers an audit expense is if an audit concludes that the franchisee under-reported adjusted gross sales for any 4-week period. Adjusted Gross Sales is defined in the franchise agreement as the total dollar amount of all sales generated through your business for a given period, including, but not limited to, payment for any services or products sold by you, whether for cash or credit. It also includes any proceeds you receive from business interruption insurance. Adjusted Gross Sales does not include (i) coupons, discounts, and bona fide refunds to customers, (ii) sales taxes collected, or (iii) sales of prepaid cards or similar products (but the redemption of any such card or product will be included in Adjusted Gross Sales).
This policy incentivizes accurate and timely reporting by Better Blend franchisees. Franchisees should ensure they maintain meticulous records and adhere to the reporting schedule to avoid potential audit costs. Failing to accurately report sales not only risks an audit but could also lead to further penalties or legal issues with Better Blend.
It is important to note that Better Blend retains the right to take action to resolve customer complaints about a franchisee's business, and the franchisee may be required to reimburse Better Blend for these expenses as well. This highlights the importance of maintaining high standards of customer service and operational compliance to avoid incurring additional costs.