Under what condition will a Bojangles franchisee be required to reimburse the franchisor for all costs and expenses connected with an inspection of their books, including accounting and attorneys' fees?
Bojangles Franchise · 2025 FDDAnswer from 2025 FDD Document
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 onehalf 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.
Source: Item 22 — CONTRACTS (FDD page 82)
What This Means (2025 FDD)
According to Bojangles's 2025 Franchise Disclosure Document, a franchisee will be required to reimburse Bojangles for all costs and expenses associated with an inspection of their financial books if the inspection reveals a significant understatement in any report submitted to Bojangles. Specifically, this reimbursement requirement is triggered if the understatement is five percent (5%) or more. These reimbursable costs include, but are not limited to, reasonable accounting and attorneys' fees incurred by Bojangles during the inspection.
This provision serves as a financial deterrent against inaccurate reporting by franchisees. By imposing the burden of inspection costs on franchisees who significantly underreport, Bojangles aims to ensure the accuracy and transparency of financial data. This policy aligns with standard franchising practices, where franchisors often reserve the right to audit franchisee records and seek reimbursement for audit-related expenses if discrepancies exceed a predetermined threshold.
For a prospective Bojangles franchisee, this clause underscores the importance of maintaining meticulous and accurate financial records. Franchisees should implement robust accounting practices and internal controls to minimize the risk of underreporting. Furthermore, franchisees should ensure that their financial reporting aligns with Bojangles's requirements to avoid potential disputes and financial penalties. Understanding this aspect of the franchise agreement is crucial for effective financial management and compliance within the Bojangles franchise system.
In addition to covering the inspection costs, the franchisee is also responsible for paying the understated amount immediately upon demand, 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 originally due until it is paid. This further emphasizes the need for accurate reporting and timely payments to Bojangles.