Under what conditions will a Bhc franchisee be required to reimburse Bhc for the cost of an examination or audit?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
If an examination or audit discloses an underpayment or understatement of any amount due Franchisor by 2% or more, or if the examination or audit is made necessary by Franchisee's failure to furnish required information or documents to Franchisor in a timely manner, or it takes Franchisor's auditors an unreasonable amount of time (more than eight hours) to assemble Franchisee's records for audit, Franchisee must reimburse Franchisor for the cost of having Franchisee's books and records examined or audited (this remedy will be in addition to any other rights or remedies Franchisor has under this Agreement or otherwise, including Franchisor's right to terminate this Agreement).
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a franchisee may be required to reimburse Bhc for the cost of an examination or audit of their books and records under specific circumstances. This reimbursement is triggered if an audit reveals an underpayment or understatement of any amount due to Bhc by 2% or more.
Additionally, a franchisee will be responsible for covering the audit costs if the examination or audit is necessitated by their failure to provide required information or documents to Bhc in a timely manner. This condition emphasizes the importance of maintaining accurate records and promptly submitting them to Bhc when requested.
Furthermore, if the franchisee's records are disorganized to the point that it takes Bhc's auditors an unreasonable amount of time, defined as more than eight hours, to assemble the necessary records for the audit, the franchisee will be required to reimburse Bhc for the audit expenses. This provision incentivizes franchisees to maintain well-organized and easily accessible financial records.