Under what conditions will Burger King reimburse the Franchisee Association for the reasonable costs of an advertising contribution audit?
Burger_King Franchise · 2025 FDDAnswer from 2025 FDD Document
Not more than once annually, the Franchisee Association shall have the right, following reasonable notice to BKC, to audit BKC's fiscal year-end results with regard to the income and expenditures of the Advertising Contribution received by BKC for BURGER KING restaurants located in the U.S.A. The audit shall be conducted in accordance with the criteria established by BKC following consultation with the Franchisee Advisory Council. The audit shall be at the sole cost of the Franchisee Association unless (i) the audit discloses a misappropriation of funds or (ii) a discrepancy resulting from an accounting error, which is in excess of three percent (3%) of the total annual Advertising Contribution received by BKC, in either of which events BKC shall reimburse the Franchisee Association for the reasonable costs of the audit. Only records of the past two fiscal years will be produced for the audit. The results of the audit will be made available, on request, to Franchisee. Franchisee shall have no independent right to audit, provided however, if no Franchisee Association exists, franchisees owning collectively at least thirty percent (30%) or more of all BURGER KING franchisee-owned and operated restaurants in the U.S.A. shall have the right to audit under the same terms and conditions set forth in this Section 9.F.
Source: Item 23 — RECEIPTS (FDD pages 127–995)
What This Means (2025 FDD)
According to Burger King's 2025 Franchise Disclosure Document, the Franchisee Association has the right to audit Burger King's fiscal year-end results regarding advertising contributions for Burger King restaurants in the U.S.A. This audit can occur no more than once annually, following reasonable notice to Burger King Corporation (BKC). The audit's criteria are set by BKC after consulting with the Franchisee Advisory Council.
Typically, the Franchisee Association bears the cost of the audit. However, Burger King will reimburse the Franchisee Association for the reasonable costs of the audit if specific conditions are met. These conditions include the audit revealing a misappropriation of funds or a discrepancy resulting from an accounting error exceeding three percent of the total annual Advertising Contribution received by BKC.
This provision protects franchisees by ensuring accountability in how advertising contributions are managed. If an audit uncovers significant financial discrepancies or misappropriation, Burger King covers the audit costs, incentivizing thorough and accurate financial management. Franchisees should note the specific thresholds (misappropriation or discrepancy exceeding 3%) that trigger reimbursement, as smaller discrepancies would not qualify for reimbursement of audit costs.