Under what circumstances does Bor Restoration charge 'Audit Fees'?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
- "Audit Fees" means the then-current fees we charge if you understate your Gross Sales by 2% or more or for any other audit permitted under this Franchise Agreement.
This fee includes our costs and expenses, including any accountants' and attorneys' fees, travel, room, and board, plus a fixed fee payable to us.
We may increase this fee at any time and in any amount after giving you no less than 60 days' prior written notice.
8.3 Inspections and Records
- b. Should we notify you at any time of defects, deficiencies, or unsatisfactory conditions concerning the Business, you agree to correct any such item or items immediately, and you will complete the corrections within the time granted for any cure under this Franchise Agreement. We may charge our then-current Audit Fee if we find deficiencies.
If we discover that you have underreported your Gross Sales by 2% or less, you will have breached this Franchise Agreement and will (i) pay all underreported Royalties and other fees calculated based on Gross Sales, plus applicable Late Fees and Default Interest; (ii) pay the then-current Audit Fees; (iii) if we decide, have your record-keeping done by a third-party bookkeeper; and, (iv) take other remedial measures we decide.
If it is determined that you have understated your Gross Sales by more than 2%, we have the right to (1) require all of the above; (2) take other remedial action, including requiring you to provide audited financial statements; or (3) terminate your franchise rights without any right to cure.
If any underreporting has been intentional, then regardless of the percentage of your Gross Sales that the underreporting represents, we have the right to terminate your franchise rights without any right to cure or avail ourselves of any other remedy available, as all remedies are cumulative.
Source: Item 23 — Receipts (FDD pages 40–202)
What This Means (2024 FDD)
According to Bor Restoration's 2024 Franchise Disclosure Document, Audit Fees may be charged under specific circumstances related to financial reporting and operational compliance. Bor Restoration defines "Audit Fees" as the fees they charge if a franchisee understates their Gross Sales by 2% or more. Additionally, Audit Fees can be applied for any other audit permitted under the Franchise Agreement. These fees cover Bor Restoration's costs and expenses, including accountants' and attorneys' fees, travel, room, and board, along with a fixed fee payable to Bor Restoration. Bor Restoration retains the right to increase these fees at any time, provided they give the franchisee no less than 60 days' prior written notice.
Bor Restoration also states that if they notify a franchisee of defects, deficiencies, or unsatisfactory conditions concerning the Business, they may charge their then-current Audit Fee if they find deficiencies. Furthermore, if Bor Restoration discovers that a franchisee has underreported their Gross Sales by 2% or less, the franchisee will be in breach of the Franchise Agreement and will be required to pay all underreported Royalties and other fees calculated based on Gross Sales, plus applicable Late Fees and Default Interest, and the then-current Audit Fees. Bor Restoration may also require the franchisee to have their record-keeping done by a third-party bookkeeper and take other remedial measures.
If the underreporting of Gross Sales exceeds 2%, Bor Restoration has the right to require all of the aforementioned actions, demand audited financial statements, or even terminate the franchise rights without any opportunity to cure the breach. In cases where the underreporting is intentional, Bor Restoration reserves the right to terminate the franchise agreement immediately, regardless of the percentage of Gross Sales underreported, without granting any right to cure. This policy underscores the importance of accurate financial reporting and operational compliance for Bor Restoration franchisees, with significant financial and contractual repercussions for non-compliance.