What are the conditions under which Bojangles may audit a franchisee, as described in Item 6, and what are the potential costs associated with such an audit, considering the initial investment in Item 7?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
r of the Franchised Business during the term hereof, showing the results of operations of the Franchised Business during said fiscal year. Franchisee's chief financial officer shall attest that the financial statements present fairly the financial position of Franchisee and the results of operations of the Franchised Business during the period covered. Franchiser shall have the right, in its reasonable discretion, to require that Franchisee submit audited statements for any fiscal year or any period or periods of a fiscal year of Franchisee during the term of this Agreement, and to require Franchisee to cause its independent certified public accountant to consult with Franchisor, at Franchisee's expense, concerning the financial statements provided by Franchisee.
- E. Franchisee and its shareholders shall also submit to Franchisor, for review or auditing, such other forms, reports, records, information, and data as Franchisor may reasonably designate, in the form and at the times and places reasonably required by Franchisor, upon request and as specified from time to time in the Manual or otherwise in writing.
- F. Franchisor or its designated agents shall have the right at all reasonable times to examine and copy, at Franchisor's expense, the books, records, and tax returns of Franchisee. Franchisor shall also have the right, at any time, to have an independent audit made of the books of Franchisee. If an inspection should reveal that any payments have been understated in any report to Franchisor, then Franchisee shall immediately pay to Franchisor the amount understated upon demand, in addition to interest from the date such amount was due until paid, at one and one-half percent (1½%) per month compounded monthly, or the maximum rate permitted by law, whichever is less. If an inspection discloses an understatement in any report of five percent (5%) or more, Franchisee shall, in addition, reimburse Franchisor for any and all costs and expenses connected with the inspection (including, without limitation, reasonable accounting and attorneys' fees). The foregoing remedies shall be in addition to any other remedies Franchisor may have.
XI.
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, Bojangles has the right to request audited financial statements from franchisees for any fiscal year or period during the agreement. Bojangles also has the right to have its franchisee's independent certified public accountant consult with Bojangles, with the franchisee bearing the expense. Franchisees must submit other forms, reports, records, information, and data for review or auditing as reasonably designated by Bojangles, in the required form, time, and place. Bojangles, or its agents, can examine and copy the franchisee's books, records, and tax returns at all reasonable times, at Bojangles's expense. Bojangles also has the right to conduct an independent audit of the franchisee's books at any time.
If an inspection reveals that payments have been understated in any report to Bojangles, the franchisee must immediately pay the understated amount, along with interest calculated at one and one-half percent (1½%) per month compounded monthly, or the maximum rate permitted by law, whichever is less, from the date the amount was due until paid. Furthermore, if the understatement in any report is five percent (5%) or more, the franchisee must reimburse Bojangles for all costs and expenses connected with the inspection, including reasonable accounting and attorneys' fees.
These audit-related costs can be significant, especially if discrepancies are found. The initial investment for a Bojangles franchise can range considerably, and unexpected audit expenses could strain a new franchisee's finances. Franchisees should maintain meticulous records and ensure accurate reporting to avoid potential audit costs and penalties. The franchise agreement outlines these obligations, emphasizing the importance of financial transparency and compliance with Bojangles's reporting requirements.