What section of the Browns Chicken franchise agreement covers Browns Chicken's right to audit?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
13. INSPECTIONS AND AUDITS.
A. Brown's Right to Inspect The Store.
and (5) within 105 days after the end of Franchisee's fiscal year, a copy of Franchisee's federal and state tax returns as filed with each taxing authority.
If Brown reasonably believes that any financial statement, tax return or schedule does not accurately reflect the revenues or financial status of the Store or is otherwise incomplete or inaccurate, Brown shall have the right to require Franchisee to submit audited annual financial statements for all subsequent fiscal years during the term of the Franchise.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to the 2025 Browns Chicken Franchise Disclosure Document, Section 13, titled "INSPECTIONS AND AUDITS," outlines Browns Chicken's right to audit its franchisees. Specifically, subsection A indicates Browns Chicken's right to inspect the store. This section likely details the circumstances under which Browns Chicken can conduct these audits and inspections.
Additionally, Section 12 discusses the financial reporting requirements for franchisees. It states that if Browns Chicken reasonably believes that any financial statement or tax return does not accurately reflect the revenues or financial status of the Store or is otherwise incomplete or inaccurate, Browns Chicken has the right to require Franchisee to submit audited annual financial statements for all subsequent fiscal years during the term of the Franchise.
These audit rights are typical in franchising, allowing Browns Chicken to ensure brand standards, accurate financial reporting, and compliance with the franchise agreement. Prospective franchisees should carefully review Section 13 and Section 12 to understand the full scope of Browns Chicken's audit rights, the frequency of audits, and the potential consequences of non-compliance.