Under what financial condition does Burneys Sweets More pay for the audit?
Burneys_Sweets_More Franchise · 2025 FDDAnswer from 2025 FDD Document
| Name of Fee1 | Amount | Due Date | Remarks |
|---|---|---|---|
| Audit Fee | The greater of $1,500 or actual cost of audit. | At once if audit shows 2% or greater underpayment. | You also pay the underpayment, if any. We pay for the audit if underpayment is 2% or less. |
Source: Item 6 — OTHER FEES (FDD pages 11–17)
What This Means (2025 FDD)
According to Burneys Sweets More's 2025 Franchise Disclosure Document, the franchisor covers the cost of an audit under specific financial conditions. If an audit reveals that the franchisee's underpayment is 2% or less, Burneys Sweets More will be responsible for paying the audit fee. However, if the audit uncovers an underpayment exceeding 2%, the franchisee is liable for the audit fee, which is either $1,500 or the actual cost of the audit, whichever is greater.
This policy creates a financial incentive for Burneys Sweets More franchisees to accurately report their sales and pay the correct royalties. Franchisees should maintain meticulous records and regularly review their financial data to minimize the risk of underpayment. Understanding this policy is crucial, as an inaccurate assessment of sales figures could lead to unexpected audit fees and additional payments.
In the event of an audit, Burneys Sweets More franchisees should be prepared to provide comprehensive financial documentation to support their reported sales figures. If an underpayment is discovered, franchisees should promptly rectify the discrepancy to avoid further penalties or legal action. This audit policy is a standard practice in franchising, ensuring transparency and accountability in financial reporting between the franchisor and its franchisees.