Under what condition is an audit cost charged to a Big Apple Bagels franchisee?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Audit | Cost of examination or audit, including charges of independent accountants and travel expenses, room and board, compensation of BAB employees. | 30 days after billing. | If audit is necessary due to your failure to furnish reports or if audit shows an under-reporting of 2% or more of Gross Revenues. |
Source: Item 6 — OTHER FEES (FDD pages 21–25)
What This Means (2025 FDD)
According to Big Apple Bagels's 2025 Franchise Disclosure Document, a franchisee may be charged for the cost of an audit under specific circumstances. Big Apple Bagels will bill the franchisee for the cost of the examination or audit, including charges from independent accountants, travel expenses, room and board, and compensation for Big Apple Bagels employees, if an audit is deemed necessary due to the franchisee's failure to furnish required reports.
Another condition that triggers an audit charge is if an audit reveals that the franchisee has under-reported gross revenues by 2% or more. This means that if a Big Apple Bagels franchisee's financial reporting is inaccurate by a significant margin, they will be responsible for covering the expenses associated with the audit process.
These audit costs are due 30 days after billing. It is important for prospective Big Apple Bagels franchisees to understand these conditions, as failing to provide accurate and timely reports can lead to unexpected expenses. Franchisees should maintain meticulous records and ensure accurate reporting to avoid triggering an audit and incurring these costs.