Under what conditions might Bor Restoration charge its Audit Fee to a franchisee?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
overnmental Authority that has jurisdiction over your Business and to which an Applicable Law applies.
- "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.
- "BOR Software Suite" means our proprietary suite of software preinstalled on the Tablet and containing estimating software and client relationship management (CRM) software.
- "BOR Software Suite Initial License Fee" means the then-current initial fee you will pay us to activate the BOR Software Suite.
Source: Item 23 — Receipts (FDD pages 40–202)
What This Means (2024 FDD)
According to Bor Restoration's 2024 Franchise Disclosure Document, the company may charge its Audit Fees to a franchisee under specific circumstances related to financial reporting and operational compliance. The Audit Fees are applicable if a franchisee understates their Gross Sales by 2% or more. Additionally, Bor Restoration may levy this fee for any other audit permitted under the Franchise Agreement, indicating a broad scope for audits beyond just sales figures. This fee is designed to cover Bor Restoration's costs and expenses associated with the audit, including accountants' and attorneys' fees, travel, room, and board, along with a fixed fee payable directly to Bor Restoration.
Furthermore, Bor Restoration reserves the right to increase the Audit Fee at any time and in any amount, provided they give the franchisee no less than 60 days' prior written notice. This clause introduces an element of uncertainty for franchisees, as the cost of audits can change over time. In addition to financial discrepancies, Bor Restoration may also charge its then-current Audit Fee if they find deficiencies during inspections of the Business. Franchisees are expected to correct any defects, deficiencies, or unsatisfactory conditions identified by Bor Restoration immediately and complete the corrections within the time granted for any cure under the Franchise Agreement.
For a prospective Bor Restoration franchisee, these audit fee conditions highlight the importance of accurate financial record-keeping and operational compliance. Underreporting gross sales, even by a small margin of 2% or more, can trigger an audit and associated fees. The potential for fee increases with 60 days' notice means franchisees need to be prepared for possible fluctuations in audit costs. Moreover, maintaining the Business in good condition and promptly addressing any deficiencies noted during inspections is crucial to avoid incurring additional audit-related charges. Franchisees should clarify with Bor Restoration what constitutes a 'deficiency' and the typical costs associated with the Audit Fee to fully understand the potential financial implications.