If an audit reveals an understatement of Gross Sales of 2% or more, what costs can Body20 charge the franchisee?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
If any such audit or review discloses an understatement of the Gross Sales for any period or periods, you will pay to us, within 10 days after demand for payment is made, all additional Royalty Fees, Brand Fund Fees, or other amounts required to be paid based upon the results of such audit or review. In addition, if such understatement for any period or periods is 2% or more of the Gross Sales for such period or periods, we may charge you up to 120% of the cost of such audit or review, including the charges of any independent accountant and any related attorneys' fees and the cost of travel and living expenses and wages for such accountant and employees or other agents of us. You will pay to us, upon demand, on any delinquent fees interest at the lesser of 18% per annum or the maximum rate allowed by law calculated from the date when the fees should have been paid to the date of actual payment. These remedies are in addition to our other remedies and rights under this Agreement and Applicable Laws.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, if an audit reveals an understatement of Gross Sales, the franchisee is responsible for additional fees and costs. Specifically, if the understatement is 2% or more of Gross Sales for any period, Body20 has the right to charge the franchisee up to 120% of the cost of the audit or review.
This cost can include charges from an independent accountant, related attorney's fees, and the costs associated with travel and living expenses, as well as wages for the accountant, employees, or other agents of Body20 involved in the audit. The franchisee is required to pay these amounts within 10 days after Body20 demands payment.
In addition to covering the audit costs, the franchisee must also pay any additional Royalty Fees, Brand Fund Fees, or other amounts that should have been paid based on the audit results. Furthermore, Body20 may charge interest on any delinquent fees at a rate of the lesser of 18% per annum or the maximum rate allowed by law, calculated from the date the fees were originally due until the date of actual payment. These financial repercussions underscore the importance of accurate financial reporting and compliance with the franchise agreement.