What is the current re-audit fee for Brueggers Bagels?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
If any audit is conducted pursuant to Section 7.4 above and the audit or examination discloses
any liability for Royalty Fee in excess of three percent (3%) of the Royalty Fee paid by Licensee for any monthly reporting period, Licensee shall also promptly pay Licensor the reasonable cost of the audit and any professional fees and the costs of travel, lodging and meals.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, if a Brueggers Bagels audit reveals a Royalty Fee liability exceeding 3% of what the franchisee paid for any monthly reporting period, the franchisee is responsible for covering the audit's costs. This includes reasonable expenses for professional fees, travel, lodging, and meals incurred by Brueggers Bagels during the audit.
In practical terms, this means that if Brueggers Bagels suspects underreporting of sales and conducts an audit that confirms a significant discrepancy (more than 3%), the franchisee will not only have to pay the owed royalties plus a hefty interest of 18% per annum (or the maximum legal rate) on the deficiency but also the full cost of the audit itself. This provision incentivizes accurate reporting and protects Brueggers Bagels from revenue loss due to underreported sales.
For a prospective Brueggers Bagels franchisee, this highlights the importance of maintaining accurate and transparent financial records. Underreporting, even unintentionally, can lead to significant financial penalties beyond the initial royalty shortfall. The cost of an audit, especially if it involves travel and professional fees, can be substantial. Therefore, franchisees should implement robust accounting practices and regularly review their sales data to ensure compliance with the royalty reporting requirements outlined in the franchise agreement.