What constitutes 'cooperation' with an audit or evaluation by Bombs Away Franchising?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
(viii) Franchisee refuses to cooperate with or permit any audit or evaluation by Bombs Away Franchising or its agents or contractors, or otherwise fails to comply with Section 10.5 or Section 11.2.
11.2 Business Evaluation. Bombs Away Franchising may accompany Franchisee or its personnel on any services performed for a customer to conduct an evaluation.
If the Location will be open to the public or used for meeting customers or potential customers, Bombs Away Franchising may enter the premises of the Business from time to time during normal business hours and conduct an evaluation.
Franchisee shall cooperate with Bombs Away Franchising's evaluators.
The evaluation may include, but is not limited to, observing operations, conducting a physical inventory, evaluating physical conditions, monitoring sales activity, speaking with employees and customers, and removing samples of products, supplies and materials.
Bombs Away Franchising may videotape and/or take photographs of the evaluation.
- 10.5 Records Audit. Bombs Away Franchising may examine and audit all books and records related to the Business, and supporting documentation, at any reasonable time.
Bombs Away Franchising may conduct the audit at the Location and/or require Franchisee to deliver copies of
books, records and supporting documentation to a location designated by Bombs Away Franchising. Franchisee shall also reimburse Bombs Away Franchising for all costs and expenses of the examination or audit if (i) Bombs Away Franchising conducted the audit because Franchisee failed to submit required reports or was otherwise not in compliance with the System, or (ii) the audit reveals that Franchisee understated Gross Sales by 3% or more for any month.
Source: Item 22 — CONTRACTS (FDD pages 35–36)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, franchisees are required to cooperate with any audit or evaluation conducted by Bombs Away Franchising or its agents. Refusal to cooperate with or permit any audit or evaluation by Bombs Away Franchising or its agents or contractors, or otherwise failing to comply with Section 10.5 or Section 11.2, constitutes a breach of the franchise agreement. This lack of cooperation can lead to termination of the agreement.
Specifically, Bombs Away Franchising may accompany the franchisee or their personnel during services performed for a customer to conduct an evaluation. If the location is open to the public, Bombs Away Franchising may enter the premises during normal business hours to conduct an evaluation. The evaluation may include observing operations, conducting a physical inventory, evaluating physical conditions, monitoring sales activity, speaking with employees and customers, and removing samples of products, supplies, and materials. Bombs Away Franchising may also videotape and/or take photographs of the evaluation.
Furthermore, Bombs Away Franchising may examine and audit all books and records related to the business, including supporting documentation, at any reasonable time. The audit may be conducted at the franchisee's location or the franchisee may be required to deliver copies of books, records, and supporting documentation to a location designated by Bombs Away Franchising. If the audit is conducted because the franchisee failed to submit required reports or was not in compliance with the system, or if the audit reveals that the franchisee understated gross sales by 3% or more for any month, the franchisee will be responsible for reimbursing Bombs Away Franchising for all costs and expenses of the examination or audit.
In practical terms, this means a Bombs Away franchisee must be prepared to provide full access to their business operations, financial records, and inventory to Bombs Away Franchising. They must also allow Bombs Away Franchising to interact with their employees and customers as part of the evaluation process. Failure to comply with these requirements can result in penalties, including the franchisee bearing the costs of the audit and potentially the termination of the franchise agreement.