Under what conditions will a Big Apple Bagels franchisee be responsible for the cost of an audit?
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 responsible for covering the expenses associated with an audit. These costs encompass the examination or audit itself, including charges from independent accountants, travel expenses, room and board, and compensation for Big Apple Bagels employees involved in the audit.
The franchisee becomes liable for these audit costs under two specific circumstances. First, if the audit is deemed necessary because the franchisee failed to furnish required reports to Big Apple Bagels. Second, if the audit reveals that the franchisee has under-reported gross revenues by 2% or more.
This policy is fairly standard in franchising, as franchisors need to ensure accurate reporting of financial information for royalty calculations and overall system health. The franchisee must pay these audit costs within 30 days after billing.