How does the Bojangles's Item 6 audit fee relate to the franchisor's business experience in Item 2?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee1 | Amount | Due Date | Comments |
|---|---|---|---|
| Audit | Deficiencies in amounts owed, plus interest | Payable upon invoice. | You also must pay all costs and expenses connected with the audit if an audit reveals an understatement of 5% or more. |
| Interest | 1.5% per month compounded monthly or the maximum rate permitted by law, whichever is less | Payable upon demand. | Payable on any overdue amount or underpayment from the date such amount was due until paid. |
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, Item 6 outlines various fees a franchisee may incur, including an audit fee. This fee is triggered if an audit reveals deficiencies in amounts owed by the franchisee, along with interest. More significantly, the franchisee is responsible for covering all costs and expenses associated with the audit if the inspection uncovers an understatement of 5% or more in any report to Bojangles. This provision incentivizes franchisees to maintain accurate financial reporting.
The audit rights detailed in the franchise agreement allow Bojangles to verify the financial performance of its franchisees. Bojangles has the right to review financial statements, require audited statements, and consult with the franchisee's CPA. They can also examine and copy the franchisee's books, records, and tax returns. These measures help Bojangles ensure that royalty and advertising fees, which are calculated as percentages of gross sales, are being accurately reported and paid.
While Item 6 specifies the conditions under which audit fees may be charged, the provided excerpts do not detail how this relates to the franchisor's business experience as described in Item 2. Item 2 typically covers the business background and experience of the franchisor's key executives and the overall history of the franchise system. To understand the connection, a prospective franchisee would need to consult Item 2 of the FDD to see how the franchisor's experience informs their approach to financial oversight and auditing practices. Specifically, it would be helpful to know if their experience includes expertise in detecting financial discrepancies or managing franchise compliance.
To fully understand the relationship between the audit fee and Bojangles's business experience, a prospective franchisee should ask the franchisor directly about their experience in financial oversight, the frequency and scope of audits, and how their experience informs their approach to ensuring financial compliance within the franchise system. This will provide a clearer picture of how Bojangles's management team's background influences their financial monitoring practices and the potential for audit-related expenses.