Under what conditions must a Browns Chicken franchisee pay audit costs?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Audit | Cost of audit including reimbursement of all of Brown's expenses. | At the time of audit. | If you do not provide reports or other information as required and it is necessary to inspect or audit your books and records, or if you understate Gross Sales by more than 2%, you must pay all audit costs including attorneys' and accountants' fees. |
Source: Item 6 — OTHER FEES (FDD pages 13–15)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, a franchisee may be responsible for covering the costs associated with an audit. These costs include reimbursing Browns Chicken for all expenses incurred during the audit.
Specifically, a Browns Chicken franchisee will be required to pay audit costs if they fail to provide required reports or other necessary information. This also applies if it becomes necessary for Browns Chicken to inspect or audit the franchisee's books and records due to this lack of information.
Furthermore, if a Browns Chicken franchisee understates their Gross Sales by more than 2%, they will be responsible for covering all audit costs. These costs encompass attorneys' and accountants' fees, in addition to the general cost of the audit. This provision incentivizes accurate reporting of sales figures by franchisees.