Under what conditions will Body20 charge a franchisee for the costs and expenses related to an inspection?
Body20 Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.5 Auditing. Without limiting the foregoing, we may audit or cause to be audited any statement you are required to submit pursuant to Section 8.2 (Reports and Financial Statements) and we may review, or cause to be reviewed, the records maintained by the Franchisee Parties or any bank or other financial institution used by you in connection with the Studio. 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.
- 8.6 Mystery Shopper Program. We may require you to participate in a mystery shopper service in order to ensure your compliance with the System and our customer service standards. We may specify mystery shopper services that you must engage at your expense, or we may engage the mystery shopper service on your behalf. If we engage the mystery shopper service on your behalf, you must pay us a fee that we will specify in the Manuals upon demand, which will not exceed 110% of our and our affiliates' actual costs and expenses. You must share the results of any mystery shopper program with us and must promptly address any deficiencies identified in any such report. You must follow any evaluation process, and use such evaluation forms, as we may from time to time require.
Source: Item 23 — RECEIPT (FDD pages 74–251)
What This Means (2025 FDD)
According to Body20's 2025 Franchise Disclosure Document, franchisees may incur costs related to audits or reviews of their financial records under specific circumstances. If an audit or review reveals that a franchisee has understated their Gross Sales for any period, they are responsible for paying Body20 all additional Royalty Fees, Brand Fund Fees, or other amounts owed based on the audit's findings. This payment must be made within 10 days of receiving a demand for payment from Body20.
Furthermore, if the understatement of Gross Sales is significant, specifically 2% or more for any period, Body20 has the right to charge the franchisee for the expenses associated with the audit or review. This charge can be up to 120% of the audit's cost, encompassing charges from independent accountants, related attorney's fees, and the costs of travel, living expenses, and wages for the accountant and Body20's employees or agents involved in the audit.
In addition to audit-related costs, Body20 may require franchisees to participate in a mystery shopper program to ensure compliance with the Body20 system and customer service standards. Franchisees may be required to engage a mystery shopper service at their own expense, or Body20 may engage the service on the franchisee's behalf. If Body20 engages the mystery shopper, the franchisee must pay a fee, specified in the manuals, that will not exceed 110% of Body20's and its affiliates' actual costs and expenses. Franchisees are obligated to share the results of any mystery shopper program with Body20 and promptly address any identified deficiencies.