Does Bumper Man have the right to audit a franchisee's books?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Accounting and Records. Franchisee will obtain and be solely responsible for its own accounting services and any required hardware or software related thereto. Franchisee will at all times maintain accurate and complete records as specified in the Manual, including, without limitation, sales, inventory and expense information, in order to generate the reports requested by Franchisor.
- (b) Inspections and Audits. Franchisor and its designated agents or representatives will have the right at any time, to inspect, examine, audit, and copy any books and records relating to the operation of the Bumper Business, provided Franchisor will use reasonable efforts to avoid any disruption of or interference with the operation of the Bumper Business during normal business hours. Franchisor will notify Franchisee in writing of any information or records discovered as it deems appropriate, and, if notified, Franchisee will promptly correct and repair, as applicable, any such conditions. Any audit, examination, or inspection will be at Franchisor's cost and expense unless: (a) Franchisor is conducting the audit, examination, or inspection due to Franchisee's failure to submit reports; or (b) the reports submitted by Franchisee for the Reporting Period show (i) an understatement of Gross Sales by 1.25% or more, (ii) an underpayment of Continuing Service Fee, and/or (iii) Franchisee's failure to report its performance of Designated Services (and thus for which Non-Reported Designated Services Fees are owed to Franchisor), in which cases all reasonable and necessary costs and expenses related to such examination will be paid by Franchisee (including, without limitation, reasonable accounting and attorneys' fees). Franchisee will immediately pay Franchisor upon demand any deficiency in the Continuing Service Fee and all Non-Reported Designated Services Fees, plus late fees as specified in Section 4. These remedies will be in addition to any other remedies Franchisor may have at law or in equity.
(c) Financial Reports. Franchisor reserves the right to require Franchisee to provide quarterly and annual unaudited profit and loss and source and use of funds statements and a balance sheet as of the end of such fiscal year. Franchisor also reserves the right to require Franchisee to deliver any other financial data, tax statements or other financial reports that Franchisor may reasonably periodically request, in the form, manner, and frequency requested. Each report will be signed or otherwise verified by Franchisee that such data, statement and reports are true, accurate and complete.
Source: Item 23 — RECEIPTS (FDD pages 45–180)
What This Means (2025 FDD)
According to Bumper Man's 2025 Franchise Disclosure Document, Bumper Man has the right to inspect, examine, audit, and copy any books and records relating to the operation of the Bumper Business. Bumper Man will try to avoid disrupting the Bumper Business during normal business hours. If Bumper Man finds any issues, they will notify the franchisee in writing, and the franchisee must promptly correct them.
Typically, Bumper Man will cover the costs of these audits, examinations, or inspections. However, if the audit is due to the franchisee not submitting reports or if the reports show an understatement of Gross Sales by 1.25% or more, an underpayment of the Continuing Service Fee, or failure to report performance of Designated Services, the franchisee will be responsible for all reasonable and necessary costs, including accounting and attorneys' fees. The franchisee must immediately pay any deficiency in the Continuing Service Fee and all Non-Reported Designated Services Fees, plus late fees.
Bumper Man also reserves the right to require franchisees to provide quarterly and annual unaudited profit and loss statements, source and use of funds statements, and a balance sheet at the end of each fiscal year. Additionally, Bumper Man can request any other financial data, tax statements, or financial reports periodically, in the format and frequency they request. The franchisee must verify that all provided data, statements, and reports are true, accurate, and complete.