Under what conditions will a Bhc Master Franchisee be required to reimburse the Franchisor 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 Master 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 Master Franchisee's records for audit, Master Franchisee must reimburse Franchisor for the cost of having Master 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 Master Franchisee may have to reimburse Bhc for the cost of an examination or audit of their books and records under specific circumstances. These circumstances include if the audit reveals an underpayment or understatement of any amount due to Bhc by 2% or more.
Another condition that would trigger reimbursement is if the audit is necessitated by the Master Franchisee's failure to provide required information or documents to Bhc in a timely manner. This highlights the importance of maintaining accurate records and promptly responding to information requests from Bhc to avoid potential audit costs.
Finally, a Master Franchisee will be responsible for reimbursing Bhc for audit costs if it takes Bhc's auditors an unreasonable amount of time, defined as more than eight hours, to assemble the Master Franchisee's records for the audit. This provision emphasizes the need for Master Franchisees to maintain well-organized and easily accessible financial records. This reimbursement is in addition to any other remedies Bhc might pursue, including termination of the agreement.