How does the Bojangles's Item 6 audit fee relate to the initial inventory costs in Item 9?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
M 6 OTHER FEES**
| 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. |
| Transfer | $5,000 per Restaurant | Payable prior to consummation of transfer. | We have the right to approve all transfers. Payable only if a transfer, alone or together with other previous, simultaneous, or proposed transfers, would have the effect of transferring a controlling interest in you, the Restaurant or in any Development or Franchise Agreement. |
| Renewal | 50% of franchise fee in effect at time of renewal | Payable upon signing of Renewal Franchise Agreement prior to end of then- current term. | The Bojangles Express Franchise Agreement does not provide for renewal rights. |
| New Product and Supplier Testing | Our reasonable expenses (estimated at $4,800 - $12,900) | Payable upon demand. | If you request our authorization to sell new products or use an alternate supplier of products or services, you must pay our reasonable expenses to evaluate the supplier. See Item 8. |
| Training – Optional Programs | Then-current training fee | Payable upon demand. | Payable for optional training programs and seminars we may offer from time to time. |
| On-site support | $2,500 per person per week | Payable upon demand. | If you request additional on-site personnel support for a Restaurant opening or at any time thereafter, we will charge you $2,500 per person per week. |
| Costs and Attorneys’ Fees | Our costs and expenses | As incurred | If we prevail in litigation regarding enforcement of the terms of any agreement, you must pay our attorneys’ fees and costs. |
| Reimbursement of Insurance Costs | Cost of procuring insurance and our expenses | Upon demand | Payable if you fail to procure or maintain required insurance and we procure such insurance. |
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, Item 6 outlines various fees a franchisee may incur, including audit fees, while Item 9 details the initial investment, including initial inventory costs. The audit fee in Item 6 is triggered if an audit reveals an understatement of 5% or more in amounts owed to Bojangles. In such cases, the franchisee is responsible for the deficiencies, interest, and all costs associated with the audit.
Item 9 includes an estimate for the initial inventory, covering products like food, paper goods, cleaning supplies, and office supplies necessary for the restaurant's opening. This inventory cost is a one-time expense incurred at the beginning of operations.
While the audit fee in Item 6 is not directly related to the initial inventory costs in Item 9, both items represent potential financial obligations for the franchisee. The audit fee is a contingent expense, arising only if there are discrepancies in reported amounts owed, whereas the initial inventory cost is a mandatory, upfront investment. Therefore, a Bojangles franchisee needs to manage their inventory and financial reporting accurately to avoid triggering an audit and its associated fees, while also ensuring they have sufficient capital for the initial inventory purchase.
In summary, the audit fee and initial inventory costs are distinct financial considerations for a Bojangles franchisee. One is a potential penalty for financial misreporting, and the other is a necessary startup expense. Both require careful financial planning and management to ensure the successful launch and operation of the franchise.