Who typically bears the cost and expense of an audit of a Brain Balance franchise?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
COMPANY has the right to require that the foregoing statements of GR and profit and loss and balance sheet be audited by a certified public accountant acceptable to COMPANY in its reasonable discretion.
- 7.03.
On five (5) days' prior notice to FRANCHISEE, COMPANY or its representatives may inspect the Franchised Business, audit and/or make copies of FRANCHISEE's books and records, or the Records, and/or enter and inspect the office in which FRANCHISEE conducts the Franchised Business for purposes of determining compliance with protocols, methodologies, Center layout, office neatness, reviewing records of the Franchised Business (including without limitation records concerning client census, maintenance of statistical data, accounts receivable, and collections), and gene
Source: Item 22 — CONTRACTS (FDD pages 70–72)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, the franchisee is generally responsible for the costs associated with an audit. Specifically, Brain Balance retains the right to request audited financial statements from the franchisee, performed by a certified public accountant that Brain Balance finds acceptable. This implies that if Brain Balance exercises this right, the franchisee would bear the expense of such an audit.
Brain Balance also has the right to inspect and audit a franchisee's books and records with only five days prior notice. This allows Brain Balance to ensure compliance with the franchise agreement and system standards. These audits can occur at any time during normal business hours, and the franchisee is obligated to permit Brain Balance to make copies of the records.
These audit provisions are fairly standard in franchising, as they allow the franchisor to maintain oversight of the financial health and operational compliance of its franchisees. For a prospective Brain Balance franchisee, it's important to factor in the potential cost of an audit when assessing the overall financial investment. Maintaining accurate and organized financial records is crucial to facilitate any potential audits and demonstrate compliance with the franchise agreement.