Is the cost of audit fees the only expense included in the audit expenses for a Burros Fries franchise?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
| Audit Expenses | Cost of Audit Fees plus interest at 18% per annum (1.5% per month) up to the maximum interest rate allowed by law. | Ten days after receipt of audit report. | Payable to us only if you understate Gross Revenues by 2% or more. We expect the cost to be between $3,500- $6,500 unless your financial records are not well kept. |
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2024 FDD)
According to the 2024 Burros Fries Franchise Disclosure Document, audit expenses include not only the cost of audit fees but also potential interest. If a Burros Fries franchisee understates gross revenues by 2% or more, they become responsible for covering the cost of the audit fees.
In addition to the audit fees, interest may be charged at a rate of 18% per annum, which translates to 1.5% per month, up to the maximum interest rate permitted by law. The FDD estimates that the cost of the audit will likely fall between $3,500 and $6,500. However, this range can increase if the franchisee's financial records are not well-maintained, suggesting additional accounting work would be required to complete the audit.
This means that a Burros Fries franchisee could face higher audit expenses if their record-keeping is poor or if they underreport revenue. Franchisees should maintain accurate and organized financial records to minimize the risk of triggering an audit and incurring these additional costs. Franchisees must pay these audit expenses within ten days after receiving the audit report.