How does the Bojangles's Item 6 audit fee relate to the franchisor's litigation in Item 3?

According to Bojangles's 2025 Franchise Disclosure Document, Item 3 discloses ongoing litigation that directly relates to potential audit fees as outlined in Item 6. Specifically, Bojangles' of America Franchisee Association, Inc. filed a complaint against Bojangles Opco, LLC, seeking, among other things, the right to conduct an audit of the Bojangles Marketing Development Fund and an Accrual Account. This legal action highlights a scenario where franchisees are actively pursuing their right to audit the franchisor's financial records.

The outcome of this litigation could significantly impact a franchisee's obligation to pay audit-related fees. Item 6 states that if an audit reveals an understatement of 5% or more in amounts owed, the franchisee must cover all costs and expenses associated with the audit, in addition to paying the deficiencies and interest. Therefore, if the franchisee association succeeds in its legal pursuit and an audit uncovers such an understatement, individual franchisees could be liable for these audit costs.

This situation underscores the importance of understanding the financial relationship between Bojangles and its franchisees, particularly concerning the Marketing Development Fund and Accrual Account. Prospective franchisees should closely monitor the progress of the litigation described in Item 3 and assess the potential financial implications of an unfavorable audit outcome, as detailed in Item 6. It also highlights the importance of understanding the rights and powers of any franchisee association.