What happens if an inspection or audit reveals that a Brueggers Bagels franchisee has understated payments?
Brueggers_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
We will also have the right, at any time, to have an independent audit made of your books. If an inspection or audit reveals that any payment to us has been understated, you must immediately pay to us the amount owed, together with applicable interest and late fees as provided in Section 5.5. If an inspection or audit reveals any underreporting of Gross Sales of two percent (2%) or more or underpayment of royalties of two percent (2%) or more, you must, in addition to payment of monies owed with interest, reimburse us for all costs connected with the inspection or audit (including expenses for travel, lodging and wages, and reasonable accounting and legal costs). The foregoing remedies are in addition to any other remedies we may have.
Source: Item 22 — CONTRACTS (FDD page 61)
What This Means (2025 FDD)
According to Brueggers Bagels's 2025 Franchise Disclosure Document, if an inspection or audit reveals that a franchisee has understated payments, the franchisee must immediately pay the amount owed, along with applicable interest and late fees as provided in Section 5.5 of the franchise agreement.
Furthermore, if the underreporting of Gross Sales or underpayment of royalties is two percent (2%) or more, the franchisee must also reimburse Brueggers Bagels for all costs connected with the inspection or audit. These costs include expenses for travel, lodging, wages, and reasonable accounting and legal costs.
It is important to note that these remedies are in addition to any other remedies Brueggers Bagels may have, indicating that the consequences of underreporting can be significant. This clause incentivizes franchisees to maintain accurate records and make timely and correct payments to avoid potential financial penalties and legal repercussions.