What are Browns Chicken's rights to inspect and audit the store?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
s, or any other data in the possession of the Franchisee's accountant, relating to Franchisee's business. In connection with this obligation, Franchisee shall execute the authorization to Franchisee's accountant attached to this Agreement as Rider F.
13. INSPECTIONS AND AUDITS.
A. Brown's Right to Inspect The Store.
To determine whether Franchisee and the Store are complying with this Agreement, and with specifications, standards and operating procedures prescribed by Brown for the operation of BROWN'S Stores, Brown or its agents shall have the right, at any reasonable time and without prior notice to Franchisee, to: (1) inspect the Premises; (2) observe the operations of the Store for such consecutive or intermittent periods as Brown deems necessary; (3) interview personnel of the Store; (4) interview customers of the Store; (5) inspect and copy any books, records and documents relating to the operation of the Store; (6) take a physical inventory of the assets of the Store; and (7) remove samples of any products and supplies. Franchisee agrees to fully cooperate with Brown in connection with any such inspections, observations and interviews. Franchisee shall present to its customers such evaluation forms as are periodically prescribed by Brown and shall participate and/or request its customers to participate in any surveys performed by or on behalf of Brown.
B. Use of Data, Name, Photograph, and Biographical Information.
Franchisee consents to the use of Franchisee's name, photograph, and biographical and financial data concerning the operation of Franchisee's business, as well as photographs of the interior and exterior of Franchisee's Store, in Brown's advertising and other literature promoting BROWN's Stores.
C. Brown's Right to Audit.
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.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, Browns Chicken has extensive rights to inspect and audit a franchisee's store to ensure compliance with the franchise agreement and operating standards. Browns Chicken can inspect the premises at any reasonable time without prior notice to ensure compliance with standards and operating procedures. This includes observing store operations, interviewing personnel and customers, inspecting and copying books and records, taking physical inventory, and removing product samples. Franchisees must fully cooperate with these inspections.
Browns Chicken also has the right to audit the franchisee's business records, bookkeeping, accounting records, sales and income tax records, and other relevant documents at any time during business hours without prior notice. Franchisees are required to cooperate fully with Browns Chicken's representatives and independent accountants during these audits. If an audit reveals an understatement of gross sales, the franchisee must pay the owed royalty fees and advertising contributions, plus interest, within 15 days of receiving the audit report.
Furthermore, if the audit is necessitated by the franchisee's failure to provide required reports or if the understatement of gross sales exceeds 2%, the franchisee is responsible for reimbursing Browns Chicken for the cost of the audit. This includes attorney fees, charges from independent accountants, per diem charges for Browns Chicken employees, and all travel and lodging expenses. These audit-related remedies are in addition to any other rights Browns Chicken has under the agreement or applicable law. These stipulations ensure Browns Chicken can maintain brand standards and verify financial accuracy across all franchise locations.