Can Browns Chicken conduct an audit of a Browns Chicken franchise without prior notice?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Brown shall have the right at any time during business hours, and without prior notice to Franchisee, to inspect and audit, or cause to be inspected and audited, the business records, bookkeeping and accounting records, sales and income tax records and returns and other records of the Store and the books and records of any corporation or partnership which holds the Franchise. Franchisee shall fully cooperate with representatives of Brown and independent accountants hired by Brown to conduct any such inspection or audit. In the event any such inspection or audit shall disclose an understatement of the Gross Sales of the Store, Franchisee shall pay to Brown, within fifteen (15) days after receipt of the inspection or audit report, the royalty fees and advertising contributions due on the amount of such understatement, plus interest from the date originally due until the date of payment. Further, in the event such inspection or audit is made necessary by the failure of Franchisee to furnish reports, supporting records, other information or financial statements, as herein required or to furnish such reports, records, information or financial statements on a timely basis, or if an understatement of Gross Sales for the period of any audit is determined by any such audit or inspection to be greater than two percent (2%), Franchisee shall reimburse Brown for the cost of such inspection or audit, including, without limitation, the charges of attorneys and any independent accountants, applicable per diem charges for employees of Brown and all of their travel and room and board expenses. The foregoing remedies shall be in addition to all other remedies and rights of Brown hereunder or under applicable law.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, Browns Chicken has the right to audit a franchisee's business records without prior notice. Browns Chicken can conduct these audits at any time during business hours. This includes inspecting and auditing business records, bookkeeping and accounting records, sales and income tax records and returns, and other records of the store, as well as the books and records of any corporation or partnership holding the franchise.
Browns Chicken franchisees are required to fully cooperate with Browns Chicken representatives and independent accountants hired by Browns Chicken to conduct these audits. If an audit reveals an understatement of gross sales, the franchisee must pay the royalty fees and advertising contributions due on the understated amount, plus interest, within fifteen days of receiving the audit report.
Furthermore, Browns Chicken can charge the franchisee for the cost of the audit if the audit was necessary due to the franchisee's failure to provide required reports, records, information, or financial statements on time. The franchisee will also be responsible for covering the costs of the audit if the understatement of gross sales is greater than two percent. These costs can include charges for attorneys and independent accountants, per diem charges for Browns Chicken employees, and their travel and lodging expenses. These remedies are in addition to any other rights Browns Chicken has under the agreement or applicable law.